TherapeuticsMD, Inc. (NASDAQ:TXMD) Analysts Are More Bearish Than They Used To Be

The analysts covering TherapeuticsMD, Inc. (NASDAQ:TXMD) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. Bidders are definitely seeing a different story, with the stock price of US$1.59 reflecting a 10% 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.

After the downgrade, the seven analysts covering TherapeuticsMD are now predicting revenues of US$128m in 2021. If met, this would reflect a huge 119% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 52% to US$0.34. Yet before this consensus update, the analysts had been forecasting revenues of US$147m and losses of US$0.28 per share in 2021. 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.

View our latest analysis for TherapeuticsMD

There was no major change to the consensus price target of US$6.20, 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 TherapeuticsMD at US$9.00 per share, while the most bearish prices it at US$4.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting TherapeuticsMD's growth to accelerate, with the forecast 119% growth ranking favourably alongside historical growth of 27% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.6% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect TherapeuticsMD to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on TherapeuticsMD after the downgrade.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with TherapeuticsMD's financials, such as a short cash runway. Learn more, and discover the 2 other flags we've identified, for free on our platform here.

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