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As you might know, Theratechnologies Inc. (TSE:TH) last week released its latest third-quarter, and things did not turn out so great for shareholders. It was a pretty negative result overall, with revenues of US$14m missing analyst predictions by 9.4%. Worse, the business reported a statutory loss of US$0.091 per share, much larger than the analysts had forecast prior to the result. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Theratechnologies from four analysts is for revenues of US$92.0m in 2021 which, if met, would be a major 45% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 74% to US$0.08. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$95.6m and losses of US$0.071 per share in 2021. So it's pretty clear the analysts have mixed opinions on Theratechnologies after this update; revenues were downgraded and per-share losses expected to increase.
The average price target fell 5.9% to CA$4.00, implicitly signalling that lower earnings per share are a leading indicator for Theratechnologies' valuation.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Theratechnologies' rate of growth is expected to accelerate meaningfully, with the forecast 45% revenue growth noticeably faster than its historical growth of 25%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 90% per year. So it's clear that despite the acceleration in growth, Theratechnologies is expected to grow meaningfully slower than the industry average.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Theratechnologies. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Theratechnologies going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for Theratechnologies you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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