It's been a mediocre week for Inotiv, Inc. (NASDAQ:NOTV) shareholders, with the stock dropping 19% to US$2.55 in the week since its latest annual results. The results overall were pretty much dead in line with analyst forecasts; revenues were US$572m and statutory losses were US$4.10 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Inotiv
Following last week's earnings report, Inotiv's four analysts are forecasting 2024 revenues to be US$583.2m, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 68% to US$1.30. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$584.9m and losses of US$1.11 per share in 2024. While this year's revenue estimates held steady, there was also a notable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The consensus price target fell 15% to US$12.81per share, with the analysts clearly concerned by ballooning losses. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Inotiv analyst has a price target of US$25.00 per share, while the most pessimistic values it at US$7.25. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
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. We would highlight that Inotiv's revenue growth is expected to slow, with the forecast 1.9% annualised growth rate until the end of 2024 being well below the historical 61% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 3.8% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Inotiv.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Inotiv. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Inotiv's revenue is expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Inotiv's future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Inotiv going out to 2026, and you can see them free on our platform here..
Before you take the next step you should know about the 3 warning signs for Inotiv (1 makes us a bit uncomfortable!) that we have uncovered.
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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.