Today is shaping up negative for IRadimed Corporation (NASDAQ:IRMD) shareholders, with the covering analyst delivering a substantial negative revision to next year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.
Following the downgrade, the latest consensus from IRadimed's one analyst is for revenues of US$35m in 2021, which would reflect an okay 2.8% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to reduce 9.8% to US$0.30 in the same period. Before this latest update, the analyst had been forecasting revenues of US$41m and earnings per share (EPS) of US$0.51 in 2021. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a large cut to earnings per share numbers as well.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that IRadimed's revenue growth is expected to slow, with forecast 2.8% increase next year well below the historical 4.2% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 9.5% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than IRadimed.
The Bottom Line
The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After a cut like that, investors could be forgiven for thinking the analyst is a lot more bearish on IRadimed, and a few readers might choose to steer clear of the stock.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, which can be seen 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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