Analysts Have Just Cut Their Esperion Therapeutics, Inc. (NASDAQ:ESPR) Revenue Estimates By 18%

Market forces rained on the parade of Esperion Therapeutics, Inc. (NASDAQ:ESPR) shareholders today, when the analysts downgraded their forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the most recent consensus for Esperion Therapeutics from its nine analysts is for revenues of US$125m in 2023 which, if met, would be a huge 66% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 27% to US$2.23. However, before this estimates update, the consensus had been expecting revenues of US$153m and US$2.03 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

Check out our latest analysis for Esperion Therapeutics

The consensus price target was broadly unchanged at US$11.05, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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 Esperion Therapeutics, with the most bullish analyst valuing it at US$22.00 and the most bearish at US$3.00 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Esperion Therapeutics' rate of growth is expected to accelerate meaningfully, with the forecast 66% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 16% p.a. 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 4.8% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Esperion Therapeutics is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Esperion Therapeutics going forwards.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Esperion Therapeutics, including recent substantial insider selling. For more information, you can click here to discover this and the 3 other concerns we've identified.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.