It’s been a mediocre week for AxoGen, Inc. (NASDAQ:AXGN) shareholders, with the stock dropping 18% to US$12.12 in the week since its latest annual results. The results look positive overall; while revenues of US$107m were in line with analyst predictions, statutory losses were 2.8% smaller than expected, with AxoGen losing US$0.74 per share. Following the result, 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. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether analysts have changed their mind on AxoGen after the latest results.
See our latest analysis for AxoGen
Taking into account the latest results, the current consensus from AxoGen’s five analysts is for revenues of US$125.5m in 2020, which would reflect a decent 18% increase on its sales over the past 12 months. Before this latest report, the consensus had been expecting revenues of US$126.2m and US$0.56 per share in losses. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.
With the increase in forecast losses for next year, it’s perhaps no surprise to see that the average analyst price target dipped 6.3% to US$22.17, with analysts signalling that growing losses would be a definite concern. 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 AxoGen at US$30.00 per share, while the most bearish prices it at US$19.00. As you can see, analysts are not all in agreement on the stock’s future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. We would highlight that AxoGen’s revenue growth is expected to slow, with forecast 18% increase next year well below the historical 34%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 7.9% next year. So it’s pretty clear that, while AxoGen’s revenue growth is expected to slow, it’s still expected to grow faster than the market itself.
The Bottom Line
The most obvious conclusion is that analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of AxoGen’s future valuation.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates – from multiple AxoGen analysts – going out to 2023, and you can see them free on our platform here.
We also provide an overview of the AxoGen Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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