Need To Know: Analysts Are Much More Bullish On Cowen Inc. (NASDAQ:COWN)

Cowen Inc. (NASDAQ:COWN) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.

Following the latest upgrade, the current consensus, from the four analysts covering Cowen, is for revenues of US$1.8b in 2021, which would reflect a definite 8.6% reduction in Cowen's sales over the past 12 months. Statutory earnings per share are supposed to crater 35% to US$8.85 in the same period. Before this latest update, the analysts had been forecasting revenues of US$1.6b and earnings per share (EPS) of US$6.19 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for Cowen

Despite these upgrades, the analysts have not made any major changes to their price target of US$55.80, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Cowen at US$68.00 per share, while the most bearish prices it at US$43.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Cowen's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 11% by the end of 2021. This indicates a significant reduction from annual growth of 29% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.8% annually for the foreseeable future. It's pretty clear that Cowen's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Cowen.

Analysts are definitely bullish on Cowen, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including recent substantial insider selling. You can learn more, and discover the 3 other risks we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.
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