Shareholders might have noticed that NeoGenomics, Inc. (NASDAQ:NEO) filed its quarterly result this time last week. The early response was not positive, with shares down 5.3% to US$39.90 in the past week. It looks like a credible result overall - although revenues of US$125m were what the analysts expected, NeoGenomics surprised by delivering a (statutory) profit of US$0.04 per share, an impressive 54% above what was forecast. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on NeoGenomics after the latest results.
After the latest results, the ten analysts covering NeoGenomics are now predicting revenues of US$532.2m in 2021. If met, this would reflect a major 25% improvement in sales compared to the last 12 months. NeoGenomics is also expected to turn profitable, with statutory earnings of US$0.15 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$543.1m and earnings per share (EPS) of US$0.20 in 2021. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.
What's most unexpected is that the consensus price target rose 9.0% to US$46.44, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic NeoGenomics analyst has a price target of US$50.00 per share, while the most pessimistic values it at US$40.50. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting NeoGenomics is an easy business to forecast or the the analysts are all using similar assumptions.
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 can infer from the latest estimates that forecasts expect a continuation of NeoGenomics'historical trends, as next year's 25% revenue growth is roughly in line with 23% 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 9.4% per year. So although NeoGenomics is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although industry data suggests that NeoGenomics' revenues are expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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 estimates - from multiple NeoGenomics analysts - going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - NeoGenomics has 2 warning signs we think 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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