One of the biggest stories of last week was how Esperion Therapeutics, Inc. (NASDAQ:ESPR) shares plunged 21% in the week since its latest quarterly results, closing yesterday at US$24.20. The results weren’t stellar – revenue fell 5.1% short of analyst estimates at US$3.8m, although statutory losses were a relative bright spot. The per-share loss was US$3.07, 14% smaller than the analysts were expecting prior to the result. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Esperion Therapeutics after the latest results.
After the latest results, the consensus from Esperion Therapeutics’ eleven analysts is for revenues of US$100.6m in 2021, which would reflect a substantial 54% decline in sales compared to the last year of performance. Losses are forecast to balloon 220% to US$11.71 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$108.6m and losses of US$10.87 per share in 2021. Overall it looks as though the analysts are negative in this update. Although sales forecasts held steady, the consensus also made a to its losses per share forecasts.
The average price target fell 5.4% to US$74.25, implicitly signalling that lower earnings per share are a leading indicator for Esperion Therapeutics’ valuation. 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. The most optimistic Esperion Therapeutics analyst has a price target of US$191 per share, while the most pessimistic values it at US$32.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 54%, a significant reduction from annual growth of 49% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 21% next year. It’s pretty clear that Esperion Therapeutics’ revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. 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 in mind, we wouldn’t be too quick to come to a conclusion on Esperion Therapeutics. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Esperion Therapeutics going out to 2024, and you can see them free on our platform here..
Don’t forget that there may still be risks. For instance, we’ve identified 3 warning signs for Esperion Therapeutics (1 is potentially serious) 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.