Stock Analysis

Analysts Are More Bearish On Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) Than They Used To Be

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NasdaqGM:VNDA
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One thing we could say about the analysts on Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the latest downgrade, Vanda Pharmaceuticals' two analysts currently expect revenues in 2022 to be US$269m, approximately in line with the last 12 months. Statutory earnings per share are anticipated to plummet 24% to US$0.45 in the same period. Before this latest update, the analysts had been forecasting revenues of US$314m and earnings per share (EPS) of US$0.78 in 2022. 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.

Check out our latest analysis for Vanda Pharmaceuticals

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NasdaqGM:VNDA Earnings and Revenue Growth February 27th 2022

The consensus price target fell 36% to US$14.00, with the weaker earnings outlook clearly leading analyst valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Vanda Pharmaceuticals, with the most bullish analyst valuing it at US$16.00 and the most bearish at US$12.00 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Vanda Pharmaceuticals' revenue growth is expected to slow, with the forecast 0.1% annualised growth rate until the end of 2022 being well below the historical 13% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Vanda Pharmaceuticals.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Vanda Pharmaceuticals' revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

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.

What are the risks and opportunities for Vanda Pharmaceuticals?

Vanda Pharmaceuticals Inc., a biopharmaceutical company, focuses on the development and commercialization of therapies to address high unmet medical needs.

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Rewards

  • Trading at 40.1% below our estimate of its fair value

  • Earnings are forecast to grow 42.5% per year

Risks

  • Significant insider selling over the past 3 months

  • Profit margins (2.5%) are lower than last year (12.8%)

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Vanda Pharmaceuticals

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