Time To Worry? Analysts Are Downgrading Their Evolus, Inc. (NASDAQ:EOLS) Outlook
Market forces rained on the parade of Evolus, Inc. (NASDAQ:EOLS) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
After the downgrade, the eight analysts covering Evolus are now predicting revenues of US$88m in 2020. If met, this would reflect a sizeable 153% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 23% to US$2.45. However, before this estimates update, the consensus had been expecting revenues of US$103m and US$2.21 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
View our latest analysis for Evolus
The consensus price target fell 12% to US$20.33, implicitly signalling that lower earnings per share are a leading indicator for Evolus' valuation. 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 Evolus at US$35.00 per share, while the most bearish prices it at US$9.00. 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 think this business will perform. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Evolus. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Evolus.
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 Evolus analysts - going out to 2024, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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