Shareholders of Adamas Pharmaceuticals, Inc. (NASDAQ:ADMS) will be pleased this week, given that the stock price is up 13% to US$3.45 following its latest quarterly results. The results weren't stellar - revenue fell 3.2% short of analyst estimates at US$20m, although statutory losses were a relative bright spot. The per-share loss was US$0.42, 10% smaller than the analysts were expecting prior to the result. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Adamas Pharmaceuticals' ten analysts are now forecasting revenues of US$100.7m in 2021. This would be a major 58% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 60% to US$1.12. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$102.2m and losses of US$1.13 per share in 2021.
The consensus price target was unchanged at US$9.31, suggesting that the business - losses and all - is executing in line with estimates. 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 Adamas Pharmaceuticals analyst has a price target of US$20.00 per share, while the most pessimistic values it at US$3.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of Adamas Pharmaceuticals'historical trends, as next year's 58% revenue growth is roughly in line with 60% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 20% per year. So although Adamas Pharmaceuticals is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$9.31, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Adamas Pharmaceuticals analysts - going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - Adamas Pharmaceuticals has 2 warning signs we think you should be aware of.
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