Analysts Just Shaved Their Veru Inc. (NASDAQ:VERU) Forecasts Dramatically

The latest analyst coverage could presage a bad day for Veru Inc. (NASDAQ:VERU), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

After this downgrade, Veru's five analysts are now forecasting revenues of US$90m in 2023. This would be a major 72% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$0.85 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$111m and losses of US$0.64 per share in 2023. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out the opportunities and risks within the US Personal Products industry.

The consensus price target fell 27% to US$25.60, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. The most optimistic Veru analyst has a price target of US$36.00 per share, while the most pessimistic values it at US$10.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

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. The analysts are definitely expecting Veru's growth to accelerate, with the forecast 54% annualised growth to the end of 2023 ranking favourably alongside historical growth of 32% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 8.3% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Veru is expected to grow much faster than its industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Veru. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Veru.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Veru 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 downgrading 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.