It's shaping up to be a tough period for Vanda Pharmaceuticals Inc. (NASDAQ:VNDA), which a week ago released some disappointing second-quarter results that could have a notable impact on how the market views the stock. Results showed a clear earnings miss, with US$64m revenue coming in 3.9% lower than what the analystexpected. Statutory earnings per share (EPS) of US$0.05 missed the mark badly, arriving some 58% below what was expected. Following the result, the analyst has 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. We thought readers would find it interesting to see the analyst latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Vanda PharmaceuticalsNasdaqGM:VNDA Earnings and Revenue Growth August 6th 2022
Following last week's earnings report, Vanda Pharmaceuticals' sole analyst are forecasting 2022 revenues to be US$264.9m, approximately in line with the last 12 months. Statutory earnings per share are forecast to dip 7.5% to US$0.18 in the same period. Before this earnings report, the analyst had been forecasting revenues of US$267.3m and earnings per share (EPS) of US$0.30 in 2022. The analyst seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.
It might be a surprise to learn that the consensus price target fell 55% to US$10.00, with the analyst clearly linking lower forecast earnings to the performance of the stock price.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Vanda Pharmaceuticals' revenue growth is expected to slow, with the forecast 1.7% annualised growth rate until the end of 2022 being well below the historical 11% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 14% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Vanda Pharmaceuticals.
The Bottom Line
The most important thing to take away is that the analyst downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Vanda Pharmaceuticals. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for Vanda Pharmaceuticals that you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.