The Consensus EPS Estimates For Coherus BioSciences, Inc. (NASDAQ:CHRS) Just Fell Dramatically

Market forces rained on the parade of Coherus BioSciences, Inc. (NASDAQ:CHRS) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After the downgrade, the eight analysts covering Coherus BioSciences are now predicting revenues of US$299m in 2023. If met, this would reflect a substantial 63% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 33% to US$2.24. However, before this estimates update, the consensus had been expecting revenues of US$342m and US$1.43 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out our latest analysis for Coherus BioSciences

The consensus price target was broadly unchanged at US$17.56, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Coherus BioSciences, with the most bullish analyst valuing it at US$30.00 and the most bearish at US$9.00 per share. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Coherus BioSciences' growth to accelerate, with the forecast 92% annualised growth to the end of 2023 ranking favourably alongside historical growth of 22% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 19% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Coherus BioSciences 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 this year, suggesting all may not be well at Coherus BioSciences. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Coherus BioSciences.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Coherus BioSciences, including dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other flags we've identified.

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.