DURECT Corporation (NASDAQ:DRRX) shareholders will have a reason to smile today as analysts deliver substantial improvements to this year’s statutory forecast. Consensus statutory figures for revenue and earnings per share (EPS) rose, with their view clearly much more bullish on the company’s business prospects. DURECT has also found favor with investors, with the stock jumping 22% to US$0.60 over the past week. It will be interesting to see if today’s upgrade is enough to propel the stock even higher.
Following the upgrade, the current consensus of DURECT’s three analysts is for revenue of US$21 million in 2022, which – if achieved – would reflect a major 58% increase in sales over the past few years. last 12 months. Losses should be contained, narrowing 11% from a year ago to US$0.15. Yet, prior to the latest estimates, analysts were forecasting revenue of US$15 million and losses of US$0.19 per share in 2022. We can see that there has certainly been a change in sentiment in this update. update, with analysts administering a significant upgrade to this update. revenue estimates for the year, while reducing their loss estimates.
Yet, despite these upgrades, analysts cut their price target by 5.9% to US$5.33, implicitly signaling that ongoing losses should weigh negatively on DURECT’s valuation. It might also be instructive to look at the range of analysts’ estimates, to gauge how different the outlier opinions are from the mean. Currently, the most bullish analyst values DURECT at US$6.00 per share, while the most bearish one values it at US$4.00. Analysts certainly have differing opinions on the company, but the scatter of estimates is not wide enough in our opinion to suggest that extreme results could be in store for DURECT shareholders.
Looking at the big picture, one way to make sense of these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we have noticed that DURECT’s growth rate is expected to accelerate significantly, with revenue expected to show 149% growth by the end of 2022 on an annualized basis. That’s well above its historic decline of 11% per year over the past five years. In contrast, our data suggests that other companies (with analyst coverage) in the industry are expected to see revenue growth of 3.5% annually. So it looks like DURECT is set to grow faster than its competitors, at least for a while.
The highlight for us was that the consensus has reduced its estimated losses this year, perhaps suggesting that DURECT is gradually heading towards profitability. Fortunately, analysts have also updated their earnings estimates, and our data indicates that sales should perform better than the broader market. The falling price target is a headache, but even so – with a serious expectation update this year, it might be time to revisit DURECT.
Even better, DURECT should soon reach its break-even point – within the next few years – according to analysts’ forecasts, which would be a momentous event for shareholders. For more information, you can click on our free platform to learn more about these forecasts.
Of course, see the management of the company invest large sums of money in a stock can be just as useful as knowing if analysts are updating their estimates. So you can also search this free list of stocks that insiders buy.
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