The Consensus EPS Estimates For Eton Pharmaceuticals, Inc. (NASDAQ:ETON) Just Fell A Lot

Market forces rained on the parade of Eton Pharmaceuticals, Inc. (NASDAQ:ETON) shareholders today, when the covering analyst downgraded their forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon. Bidders are definitely seeing a different story, with the stock price of US$3.97 reflecting a 12% rise in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

Following the downgrade, the most recent consensus for Eton Pharmaceuticals from its sole analyst is for revenues of US$41m in 2024 which, if met, would be a major 26% increase on its sales over the past 12 months. Statutory earnings per share are supposed to descend 20% to US$0.07 in the same period. Prior to this update, the analyst had been forecasting revenues of US$50m and earnings per share (EPS) of US$0.26 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for Eton Pharmaceuticals

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. We would highlight that Eton Pharmaceuticals' revenue growth is expected to slow, with the forecast 20% annualised growth rate until the end of 2024 being well below the historical 62% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 8.6% per year. Even after the forecast slowdown in growth, it seems obvious that Eton Pharmaceuticals is also expected to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Eton Pharmaceuticals. Unfortunately, the analyst also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After a cut like that, investors could be forgiven for thinking the analyst is a lot more bearish on Eton Pharmaceuticals, and a few readers might choose to steer clear of the stock.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.

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.

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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.