Cipher Pharmaceuticals Inc. Just Missed EPS By 37%: Here's What Analysts Think Will Happen Next

Shareholders will be ecstatic, with their stake up 26% over the past week following Cipher Pharmaceuticals Inc.'s (TSE:CPH) latest full-year results. Results overall were not great, with earnings of US$0.16 per share falling drastically short of analyst expectations. Meanwhile revenues hit US$22m and were slightly better than forecasts. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Cipher Pharmaceuticals

Taking into account the latest results, the three analysts covering Cipher Pharmaceuticals provided consensus estimates of US$18.1m revenue in 2021, which would reflect a not inconsiderable 16% decline on its sales over the past 12 months. Per-share earnings are expected to step up 15% to US$0.18. Before this earnings report, the analysts had been forecasting revenues of US$18.4m and earnings per share (EPS) of US$0.19 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at CA$1.39. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Cipher Pharmaceuticals at CA$2.22 per share, while the most bearish prices it at CA$0.85. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. One more thing stood out to us about these estimates, and it's the idea that Cipher Pharmaceuticals' decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 16% to the end of 2021. This tops off a historical decline of 11% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 32% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Cipher Pharmaceuticals to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse 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 Cipher Pharmaceuticals going out to 2023, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for Cipher Pharmaceuticals that you need to take into consideration.

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