Avinger, Inc. (NASDAQ:AVGR) defied analyst predictions to release its quarterly results, which were ahead of market expectations. Avinger outperformed on both revenues and the expected loss per share, with revenues of US$2.3m beating estimates by 16%. Statutory losses were US$0.08, 24% smaller thanthe 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the twin analysts covering Avinger are now predicting revenues of US$12.3m in 2021. If met, this would reflect a huge 43% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 53% to US$0.35. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$12.0m and losses of US$0.49 per share in 2021. So it seems there's been a definite increase in optimism about Avinger's future following the latest consensus numbers, with a the loss per share forecasts in particular.
Yet despite these upgrades, the analysts cut their price target 29% to US$1.00, implicitly signalling that the ongoing losses are likely to weigh negatively on Avinger's valuation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Avinger's past performance and to peers in the same industry. For example, we noticed that Avinger's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 43%, well above its historical decline of 14% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 9.9% per year. Not only are Avinger's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster 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 Avinger. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 5 warning signs for Avinger (2 are concerning) you should be aware of.
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