Cardiovascular Systems, Inc. (NASDAQ:CSII) just released its first-quarter report and things are looking bullish. Results overall were solid, with revenues arriving 7.1% better than analyst forecasts at US$61m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.05 per share, were 7.1% smaller than the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the consensus forecast from Cardiovascular Systems’ ten analysts is for revenues of US$267.6m in 2021, which would reflect a meaningful 15% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 42% to US$0.38. Before this latest report, the consensus had been expecting revenues of US$268.7m and US$0.45 per share in losses. Although the revenue estimates have not really changed Cardiovascular Systems’future looks a little different to the past, with a the loss per share forecasts in particular.
There’s been no major changes to the consensus price target of US$44.25, suggesting that reduced loss estimates are not enough to have a long-term positive impact on the stock’s valuation. 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 Cardiovascular Systems, with the most bullish analyst valuing it at US$50.00 and the most bearish at US$38.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It’s clear from the latest estimates that Cardiovascular Systems’ rate of growth is expected to accelerate meaningfully, with the forecast 15% revenue growth noticeably faster than its historical growth of 8.1%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 10.0% per year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Cardiovascular Systems is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. We have forecasts for Cardiovascular Systems going out to 2024, and you can see them free on our platform here.
And what about risks? Every company has them, and we’ve spotted 1 warning sign for Cardiovascular Systems you should know about.
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.