Time To Worry? Analysts Are Downgrading Their Ocular Therapeutix, Inc. (NASDAQ:OCUL) Outlook
Today is shaping up negative for Ocular Therapeutix, Inc. (NASDAQ:OCUL) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business. Surprisingly the share price has been buoyant, rising 14% to US$5.50 in the past 7 days. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.
After the downgrade, the seven analysts covering Ocular Therapeutix are now predicting revenues of US$74m in 2022. If met, this would reflect a major 91% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 31% to US$0.80. However, before this estimates update, the consensus had been expecting revenues of US$86m and US$0.71 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
See our latest analysis for Ocular Therapeutix
The consensus price target fell 5.4% to US$20.00, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Ocular Therapeutix analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$14.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
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 Ocular Therapeutix's rate of growth is expected to accelerate meaningfully, with the forecast 91% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 70% 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 4.4% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Ocular Therapeutix is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Ocular Therapeutix analysts - going out to 2024, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
