Verrica Pharmaceuticals Inc. (NASDAQ:VRCA) investors will be delighted, with the company turning in some strong numbers with its latest results. Revenues of US$5.2m were better than expected, some 14% ahead of forecasts. The company still lost a statutory US$0.37 per share, although the losses were 11% smaller than the analysts expected. 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.
Taking into account the latest results, the current consensus from Verrica Pharmaceuticals' six analysts is for revenues of US$23.1m in 2024. This would reflect a sizeable 66% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 25% to US$1.53. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$24.8m and losses of US$1.45 per share in 2024. So it's pretty clear consensus is more negative on Verrica Pharmaceuticals after the new consensus numbers; while the analysts trimmed their revenue estimates, they also administered a moderate increase in per-share loss expectations.
The average price target fell 9.7% to US$14.00, implicitly signalling that lower earnings per share are a leading indicator for Verrica Pharmaceuticals' valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Verrica Pharmaceuticals, with the most bullish analyst valuing it at US$18.00 and the most bearish at US$12.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
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. The analysts are definitely expecting Verrica Pharmaceuticals' growth to accelerate, with the forecast 175% annualised growth to the end of 2024 ranking favourably alongside historical growth of 35% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 10% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Verrica Pharmaceuticals is expected to grow much faster than its industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Verrica Pharmaceuticals. They also downgraded Verrica Pharmaceuticals' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Verrica Pharmaceuticals' future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Verrica Pharmaceuticals. Long-term earnings power is much more important than next year's profits. We have forecasts for Verrica Pharmaceuticals going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 4 warning signs for Verrica Pharmaceuticals (1 is concerning!) that we have uncovered.
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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.
