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CASI Pharmaceuticals, Inc. (NASDAQ:CASI) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. Investor sentiment seems to be improving too, with the share price up 4.8% to US$1.74 over the past 7 days. Could this big upgrade push the stock even higher?
Following the upgrade, the latest consensus from CASI Pharmaceuticals' three analysts is for revenues of US$9.4m in 2020, which would reflect a major 128% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 26% to US$0.35. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$7.9m and losses of US$0.41 per share in 2020. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
Yet despite these upgrades, the analysts cut their price target 45% to US$3.20, implicitly signalling that the ongoing losses are likely to weigh negatively on CASI Pharmaceuticals' valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values CASI Pharmaceuticals at US$3.50 per share, while the most bearish prices it at US$2.89. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of CASI Pharmaceuticals'historical trends, as next year's 128% revenue growth is roughly in line with 108% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 22% per year. So it's pretty clear that CASI Pharmaceuticals is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around CASI Pharmaceuticals'prospects. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The declining price target is a puzzle, but still - with a serious upgrade to this year's expectations, it might be time to take another look at CASI Pharmaceuticals.
Analysts are definitely bullish on CASI Pharmaceuticals, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including a short cash runway. For more information, you can click through to our platform to learn more about this and the 4 other warning signs we've identified .
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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