Market forces rained on the parade of Avadel Pharmaceuticals plc (NASDAQ:AVDL) shareholders today, when the analysts downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the latest downgrade, the current consensus, from the six analysts covering Avadel Pharmaceuticals, is for revenues of US$27m in 2020, which would reflect a concerning 50% reduction in Avadel Pharmaceuticals' sales over the past 12 months. Losses are expected to increase substantially, hitting US$0.61 per share. However, before this estimates update, the consensus had been expecting revenues of US$33m and US$0.63 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also reducing the estimated losses the business will incur.
See our latest analysis for Avadel Pharmaceuticals
Of course, another way to look at these forecasts is to place them into context against the industry itself. One more thing stood out to us about these estimates, and it's the idea that Avadel Pharmaceuticals'decline is expected to accelerate, with revenues forecast to fall 50% next year, topping off a historical decline of 9.7% 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 6.1% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Avadel Pharmaceuticals to suffer worse than the wider industry.
The Bottom Line
Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Avadel Pharmaceuticals after today.
There might be good reason for analyst bearishness towards Avadel Pharmaceuticals, like major dilution from new stock issuance in the past year. Learn more, and discover the 1 other risk we've identified, for free on our platform here.
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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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