The analysts covering BioLife Solutions, Inc. (NASDAQ:BLFS) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. At US$12.34, shares are up 8.3% in the past 7 days. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.
Following the downgrade, the consensus from seven analysts covering BioLife Solutions is for revenues of US$129m in 2024, implying a definite 16% decline in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 57% to US$1.00 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$154m and losses of US$0.41 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
The consensus price target fell 7.2% to US$22.14, implicitly signalling that lower earnings per share are a leading indicator for BioLife Solutions' valuation.
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 sales are expected to reverse, with a forecast 13% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 44% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.8% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - BioLife Solutions is expected to lag the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at BioLife Solutions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of BioLife Solutions.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple BioLife Solutions analysts - going out to 2025, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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