Verrica Pharmaceuticals Inc. (NASDAQ:VRCA) Analysts Are Cutting Their Estimates: Here's What You Need To Know

Verrica Pharmaceuticals Inc. (NASDAQ:VRCA) investors will be delighted, with the company turning in some strong numbers with its latest results. Revenues of US$5.2m were better than expected, some 14% ahead of forecasts. The company still lost a statutory US$0.37 per share, although the losses were 11% smaller than the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Verrica Pharmaceuticals

Following the latest results, Verrica Pharmaceuticals' six analysts are now forecasting revenues of US$23.1m in 2024. This would be a sizeable 66% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 25% to US$1.53. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$24.8m and losses of US$1.45 per share in 2024. So it's pretty clear consensus is more negative on Verrica Pharmaceuticals after the new consensus numbers; while the analysts trimmed their revenue estimates, they also administered a pronounced increase to per-share loss expectations.

The consensus price target fell 9.7% to US$14.00, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. The most optimistic Verrica Pharmaceuticals analyst has a price target of US$18.00 per share, while the most pessimistic values it at US$12.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Verrica Pharmaceuticals shareholders.

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. It's clear from the latest estimates that Verrica Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with the forecast 175% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 35% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 10% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Verrica Pharmaceuticals to grow faster than the wider 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 Verrica Pharmaceuticals. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Verrica Pharmaceuticals' future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Verrica Pharmaceuticals going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 4 warning signs for Verrica Pharmaceuticals (1 is concerning!) that we have uncovered.

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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.