The analysts might have been a bit too bullish on PharmaCielo Ltd. (CVE:PCLO), given that the company fell short of expectations when it released its full-year results last week. It definitely looks like a negative result overall with revenues falling 16% short of analyst estimates at CA$787k. Statutory losses were CA$0.36 per share, 34% bigger than what the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus from PharmaCielo's two analysts is for revenues of CA$14.5m in 2020, which would reflect a substantial 1737% increase on its sales over the past 12 months. Per-share statutory losses are expected to explode, reaching CA$0.17 per share. In the lead-up to this report, the analysts had been modelling revenues of CA$26.0m and earnings per share (EPS) of CA$0.69 in 2020. There looks to have been a major change in sentiment regarding PharmaCielo's prospects following the latest results, with a pretty serious reduction to revenues and the analysts now forecasting a loss instead of a profit.
The average price target fell 29% to CA$3.50, implicitly signalling that lower earnings per share are a leading indicator for PharmaCielo's valuation.
The Bottom Line
The most important thing to take away is that the analysts are expecting PharmaCielo to become unprofitable next year. They also downgraded their revenue estimates, although industry data suggests that PharmaCielo's revenues are expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on PharmaCielo. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.
We don't want to rain on the parade too much, but we did also find 3 warning signs for PharmaCielo (1 doesn't sit too well with us!) that you need to be mindful of.
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