One thing we could say about the analysts on Zogenix, Inc. (NASDAQ:ZGNX) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Shares are up 4.6% to US$24.78 in the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
Following the downgrade, the most recent consensus for Zogenix from its eleven analysts is for revenues of US$12m in 2020 which, if met, would be a sizeable 149% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 59% to US$3.62. Yet before this consensus update, the analysts had been forecasting revenues of US$12m and losses of US$3.57 per share in 2020. There doesn't appear to have been a major change in analyst sentiment following this consensus update, with minimal changes to revenue and loss per share estimates.
Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Zogenix's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 149%, well above its historical decline of 43% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 6.4% per year. So it looks like Zogenix is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Zogenix's prospects. On the plus side, there were no major changes to revenue estimates; although analyst forecasts do imply revenues will come in ahead of the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Zogenix going forwards.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Zogenix 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.
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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