Growth Investors: Industry Analysts Just Upgraded Their ObsEva SA (NASDAQ:OBSV) Revenue Forecasts By 12%
Celebrations may be in order for ObsEva SA (NASDAQ:OBSV) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline. Investors have been pretty optimistic on ObsEva too, with the stock up 43% to US$3.36 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the latest upgrade, the current consensus, from the seven analysts covering ObsEva, is for revenues of US$8.4k in 2020, which would reflect a stressful 44% reduction in ObsEva's sales over the past 12 months. Losses are predicted to fall substantially, shrinking 28% to US$1.70. Yet before this consensus update, the analysts had been forecasting revenues of US$7.5k and losses of US$1.77 per share in 2020. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
See our latest analysis for ObsEva
The consensus price target fell 6.0%, to US$15.75, suggesting that the analysts remain pessimistic on the company, despite the improved earnings and revenue outlook. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on ObsEva, with the most bullish analyst valuing it at US$36.00 and the most bearish at US$4.00 per share. 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. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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. We would highlight that sales are expected to reverse, with the forecast 44% revenue decline a notable change from historical growth of 14% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 22% next year. It's pretty clear that ObsEva's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around ObsEva'sprospects. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of ObsEva's future valuation. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at ObsEva.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 5 potential flags with ObsEva, including dilutive stock issuance over the past year. You can learn more, and discover the 3 other flags we've identified, 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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