Shareholders of Adamas Pharmaceuticals, Inc. (NASDAQ:ADMS) will be pleased this week, given that the stock price is up 13% to US$3.45 following its latest third-quarter results. Revenues of US$20m came in 3.2% below estimates, but statutory losses were well contained with a per-share loss of US$0.42 being some 10% smaller than what the analysts were predicting. 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.
Following the latest results, Adamas Pharmaceuticals' ten analysts are now forecasting revenues of US$100.7m in 2021. This would be a substantial 58% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 60% to US$1.12. Before this earnings announcement, the analysts had been modelling revenues of US$102.2m and losses of US$1.13 per share in 2021.
As a result there was no major change to the consensus price target of US$9.31, implying that the business is trading roughly in line with expectations despite ongoing losses. 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 Adamas Pharmaceuticals, with the most bullish analyst valuing it at US$20.00 and the most bearish at US$3.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of Adamas Pharmaceuticals'historical trends, as next year's 58% revenue growth is roughly in line with 60% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 20% per year. So it's pretty clear that Adamas Pharmaceuticals is forecast to grow substantially faster than its industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$9.31, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Adamas Pharmaceuticals analysts - going out to 2024, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Adamas Pharmaceuticals that you should be aware of.
This article by Simply Wall St is general in nature. 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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