Osmotica Pharmaceuticals plc (NASDAQ:OSMT) Just Reported And Analysts Have Been Cutting Their Estimates

By
Simply Wall St
Published
November 13, 2020

A week ago, Osmotica Pharmaceuticals plc (NASDAQ:OSMT) came out with a strong set of third-quarter numbers that could potentially lead to a re-rate of the stock. Sales crushed expectations at US$57m, beating expectations by 54%. Osmotica Pharmaceuticals reported a statutory loss of US$0.14 per share, which - although not amazing - was much smaller than the analysts predicted. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Osmotica Pharmaceuticals

NasdaqGS:OSMT Earnings and Revenue Growth November 13th 2020

After the latest results, the consensus from Osmotica Pharmaceuticals' five analysts is for revenues of US$172.0m in 2021, which would reflect a considerable 15% decline in sales compared to the last year of performance. Losses are expected to be contained, narrowing 19% from last year to US$0.71. Before this latest report, the consensus had been expecting revenues of US$181.6m and US$0.59 per share in losses. So it's pretty clear the analysts have mixed opinions on Osmotica Pharmaceuticals after this update; revenues were downgraded and per-share losses expected to increase.

There was no major change to the consensus price target of US$9.60, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Osmotica Pharmaceuticals at US$12.00 per share, while the most bearish prices it at US$5.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. Over the past three years, revenues have declined around 7.1% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 15% decline in revenue next year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 6.6% per year. So while a broad number of companies are forecast to decline, unfortunately Osmotica Pharmaceuticals is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Osmotica Pharmaceuticals. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Osmotica Pharmaceuticals going out to 2024, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 1 warning sign for Osmotica Pharmaceuticals that you should be aware of.

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This article by Simply Wall St is general in nature. 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.
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