News Flash: Analysts Just Made A Notable Upgrade To Their Surmodics, Inc. (NASDAQ:SRDX) Forecasts

Surmodics, Inc. (NASDAQ:SRDX) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline. Surmodics has also found favour with investors, with the stock up a notable 20% to US$30.00 over the past week. Could this upgrade be enough to drive the stock even higher?

Following the upgrade, the latest consensus from Surmodics' four analysts is for revenues of US$117m in 2023, which would reflect a meaningful 14% improvement in sales compared to the last 12 months. Losses are presumed to reduce, shrinking 19% from last year to US$2.06. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$105m and losses of US$2.15 per share in 2023. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

See our latest analysis for Surmodics

The consensus price target rose 6.8% to US$54.75, with the analysts encouraged by the higher revenue and lower forecast losses for this year. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Surmodics, with the most bullish analyst valuing it at US$75.00 and the most bearish at US$36.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Surmodics' rate of growth is expected to accelerate meaningfully, with the forecast 29% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 4.7% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.8% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Surmodics to grow faster than the wider industry.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Surmodics is moving incrementally towards profitability. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Surmodics.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Surmodics analysts - going out to 2025, and you can see them 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.