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Shareholders might have noticed that Repro Med Systems, Inc. (NASDAQ:KRMD) filed its quarterly result this time last week. The early response was not positive, with shares down 4.2% to US$3.43 in the past week. Revenues of US$5.5m beat expectations by a respectable 6.1%, although statutory losses per share increased. Repro Med Systems lost US$0.03, which was 50% more than what the analysts had included in their models. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Repro Med Systems' three analysts is for revenues of US$22.0m in 2021, which would reflect an okay 4.3% improvement in sales compared to the last 12 months. Losses are forecast to balloon 43% to US$0.097 per share. Before this earnings announcement, the analysts had been modelling revenues of US$21.9m and losses of US$0.087 per share in 2021. While this year's revenue estimates held steady, there was also a noticeable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 6.1% to US$5.17, with the analysts signalling that growing losses would be a definite concern. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Repro Med Systems, with the most bullish analyst valuing it at US$7.00 and the most bearish at US$3.50 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Repro Med Systems' revenue growth is expected to slow, with the forecast 8.7% annualised growth rate until the end of 2021 being well below the historical 14% p.a. growth over the last five years. Compare this to the 277 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 8.4% per year. Factoring in the forecast slowdown in growth, it looks like Repro Med Systems is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall 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 Repro Med Systems. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Repro Med Systems going out to 2023, and you can see them free on our platform here..
It is also worth noting that we have found 1 warning sign for Repro Med Systems that you need to take into consideration.
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.
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