Shareholders in Amarin Corporation plc (NASDAQ:AMRN) had a terrible week, as shares crashed 21% to US$0.62 in the week since its latest second-quarter results. Revenues beat expectations, coming in 32% ahead of forecasts, and the company broke even on a statutory earnings per share (EPS) level. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the recent earnings report, the consensus from four analysts covering Amarin is for revenues of US$203.0m in 2024. This implies a stressful 23% decline in revenue compared to the last 12 months. Per-share losses are expected to explode, reaching US$0.18 per share. Before this earnings announcement, the analysts had been modelling revenues of US$207.4m and losses of US$0.16 per share in 2024. So it's pretty clear consensus is more negative on Amarin after the new consensus numbers; while the analysts trimmed their revenue estimates, they also administered a modest increase to per-share loss expectations.
The average price target fell 59% to US$1.00, implicitly signalling that lower earnings per share are a leading indicator for Amarin's valuation.
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. One more thing stood out to us about these estimates, and it's the idea that Amarin's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 41% to the end of 2024. This tops off a historical decline of 8.9% a year 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 revenue grow 18% per year. So while a broad number of companies are forecast to grow, unfortunately Amarin is expected to see its revenue affected worse than other companies in the industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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.
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 Amarin going out to 2026, and you can see them free on our platform here.
Even so, be aware that Amarin is showing 4 warning signs in our investment analysis , and 1 of those is a bit unpleasant...
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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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com