The analysts covering Danimer Scientific, Inc. (NYSE:DNMR) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Shares are up 5.1% to US$5.13 in the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
Following this downgrade, Danimer Scientific's three analysts are forecasting 2022 revenues to be US$59m, approximately in line with the last 12 months. Losses are supposed to balloon 71% to US$1.04 per share. However, before this estimates update, the consensus had been expecting revenues of US$104m and US$1.03 per share in losses. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to this year's revenue estimates, while at the same time holding losses per share steady.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Danimer Scientific's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 1.6% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.5% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Danimer Scientific.
The Bottom Line
Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Danimer Scientific's revenues are expected to grow slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Danimer Scientific after today.
That said, the analysts might have good reason to be negative on Danimer Scientific, given a short cash runway. For more information, you can click here to discover this and the 3 other flags we've identified.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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.
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