Revenue Beat: Innovative Industrial Properties, Inc. Beat Analyst Estimates By 16%

As you might know, Innovative Industrial Properties, Inc. (NYSE:IIPR) just kicked off its latest quarterly results with some very strong numbers. Innovative Industrial Properties beat revenue and statutory earnings per share (EPS) expectations, with sales hitting US$34m (16% ahead of estimates) and EPS reaching US$0.86 (a 6.4% beat). 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Innovative Industrial Properties

After the latest results, the seven analysts covering Innovative Industrial Properties are now predicting revenues of US$190.8m in 2021. If met, this would reflect a substantial 96% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 71% to US$5.38. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$181.9m and earnings per share (EPS) of US$5.48 in 2021. There doesn't appear to have been a major change in sentiment following the results, other than the slight bump in revenue estimates.

The analysts increased their price target 10% to US$156, perhaps signalling that higher revenues are a strong leading indicator for Innovative Industrial Properties's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Innovative Industrial Properties analyst has a price target of US$177 per share, while the most pessimistic values it at US$104. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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 clear from the latest estimates that Innovative Industrial Properties' rate of growth is expected to accelerate meaningfully, with the forecast 96% revenue growth noticeably faster than its historical growth of 65%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.0% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Innovative Industrial Properties to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than 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. We have forecasts for Innovative Industrial Properties going out to 2023, and you can see them free on our platform here.

Plus, you should also learn about the 4 warning signs we've spotted with Innovative Industrial Properties (including 1 which doesn't sit too well with us) .

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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