Shareholders of Champions Oncology, Inc. (NASDAQ:CSBR) will be pleased this week, given that the stock price is up 11% to US$8.28 following its latest first-quarter results. Champions Oncology beat revenue forecasts by a solid 11% to hit US$9.5m. Statutory earnings per share came in at US$0.01, in line with expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Champions Oncology from three analysts is for revenues of US$38.6m in 2021 which, if met, would be a notable 10% increase on its sales over the past 12 months. Earnings are expected to improve, with Champions Oncology forecast to report a statutory profit of US$0.06 per share. Before this earnings report, the analysts had been forecasting revenues of US$37.5m and earnings per share (EPS) of US$0.10 in 2021. While next year's revenue estimates increased, there was also a large cut to EPS expectations, suggesting the consensus has a bit of a mixed view of these results.
The analysts also upgraded Champions Oncology's price target 6.5% to US$11.00, implying that the higher sales are expected to generate enough value to offset the forecast decline in earnings. 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 Champions Oncology, with the most bullish analyst valuing it at US$12.00 and the most bearish at US$10.00 per share. This is a very narrow spread of estimates, implying either that Champions Oncology is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Champions Oncology's revenue growth will slow down substantially, with revenues next year expected to grow 10%, compared to a historical growth rate of 25% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.0% next year. So it's pretty clear that, while Champions Oncology's revenue growth is expected to slow, it's expected to grow roughly in line with the 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. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Champions Oncology going out to 2025, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 1 warning sign for Champions Oncology you should know about.
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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