Yahoo Finance Rainbows and Unicorns: Cowen Inc. (NASDAQ:COWN) Analysts Just Became A Lot More Optimistic
Shareholders in Cowen Inc. (NASDAQ:COWN) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term 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.
Following the upgrade, the most recent consensus for Cowen from its three analysts is for revenues of US$1.2b in 2020 which, if met, would be a substantial 28% increase on its sales over the past 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of US$2.96 per share this year. Previously, the analysts had been modelling revenues of US$963m and earnings per share (EPS) of US$1.69 in 2020. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
See our latest analysis for Cowen
With these upgrades, we're not surprised to see that the analysts have lifted their price target 22% to US$20.67 per share. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Cowen, with the most bullish analyst valuing it at US$22.00 and the most bearish at US$20.00 per share. This is a very narrow spread of estimates, implying either that Cowen is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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 Cowen's rate of growth is expected to accelerate meaningfully, with the forecast 28% revenue growth noticeably faster than its historical growth of 22% 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 4.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Cowen is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Cowen.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Cowen analysts - going out to 2022, 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.
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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