Yahoo Finance Time To Worry? Analysts Are Downgrading Their Eagle Pharmaceuticals, Inc. (NASDAQ:EGRX) Outlook
The latest analyst coverage could presage a bad day for Eagle Pharmaceuticals, Inc. (NASDAQ:EGRX), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
Following the downgrade, the most recent consensus for Eagle Pharmaceuticals from its three analysts is for revenues of US$314m in 2022 which, if met, would be a solid 15% increase on its sales over the past 12 months. Per-share earnings are expected to shoot up 68% to US$2.88. Prior to this update, the analysts had been forecasting revenues of US$398m and earnings per share (EPS) of US$7.86 in 2022. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a large cut to earnings per share numbers as well.
Check out our latest analysis for Eagle Pharmaceuticals
The consensus price target fell 11% to US$43.00, with the weaker earnings outlook clearly leading analyst valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Eagle Pharmaceuticals at US$45.00 per share, while the most bearish prices it at US$41.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Eagle Pharmaceuticals is an easy business to forecast or the underlying assumptions are obvious.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that Eagle Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 33% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 3.0% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 15% per year. So it looks like Eagle Pharmaceuticals is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Eagle Pharmaceuticals. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Eagle Pharmaceuticals.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Eagle Pharmaceuticals 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.
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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.
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