As you might know, TransMedics Group, Inc. (NASDAQ:TMDX) just kicked off its latest annual results with some very strong numbers. TransMedics Group beat expectations with revenues of US$26m arriving 7.0% ahead of forecasts. The company also reported a statutory loss of US$1.16, 2.9% smaller than was expected. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, TransMedics Group's five analysts are now forecasting revenues of US$45.7m in 2021. This would be a sizeable 78% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 43% to US$0.66. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$45.7m and losses of US$0.66 per share in 2021.
The average price target fell 113% to US$40.80, with the ongoing losses seemingly a concern for the analysts, despite the lack of real change to the earnings forecasts. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values TransMedics Group at US$44.00 per share, while the most bearish prices it at US$15.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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. The analysts are definitely expecting TransMedics Group's growth to accelerate, with the forecast 78% annualised growth to the end of 2021 ranking favourably alongside historical growth of 40% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.1% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that TransMedics Group is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for TransMedics Group going out to 2023, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for TransMedics Group 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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