A week ago, electroCore, Inc. (NASDAQ:ECOR) came out with a strong set of second-quarter numbers that could potentially lead to a re-rate of the stock. Revenues beat expectations coming in atUS$6.1m, ahead of estimates by 9.6%. Statutory losses were somewhat smaller thanthe analysts expected, coming in at US$0.38 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the five analysts covering electroCore are now predicting revenues of US$25.5m in 2024. If met, this would reflect a meaningful 20% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 33% to US$1.47. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$24.5m and losses of US$1.52 per share in 2024. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrades to both revenue and loss per share forecasts for this year.
There was no major change to the consensus price target of US$23.16, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. 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. Currently, the most bullish analyst values electroCore at US$30.00 per share, while the most bearish prices it at US$15.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
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. We can infer from the latest estimates that forecasts expect a continuation of electroCore'shistorical trends, as the 44% annualised revenue growth to the end of 2024 is roughly in line with the 45% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 8.2% annually. So it's pretty clear that electroCore 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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$23.16, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on electroCore. Long-term earnings power is much more important than next year's profits. We have forecasts for electroCore going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with electroCore , and understanding them should be part of your investment process.
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