Yahoo Finance These Analysts Think Next Science Limited's (ASX:NXS) Sales Are Under Threat
The latest analyst coverage could presage a bad day for Next Science Limited (ASX:NXS), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the downgrade, the most recent consensus for Next Science from its twin analysts is for revenues of US$11m in 2022 which, if met, would be a meaningful 8.2% increase on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$16m in 2022. The consensus view seems to have become more pessimistic on Next Science, noting the sizeable cut to revenue estimates in this update.
View our latest analysis for Next Science
Notably, the analysts have cut their price target 27% to US$0.90, suggesting concerns around Next Science's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Next Science analyst has a price target of US$1.71 per share, while the most pessimistic values it at US$0.85. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Next Science's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 17% growth on an annualised basis. This is compared to a historical growth rate of 40% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% annually. So it's pretty clear that, while Next Science's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Next Science this year. They're also forecasting more rapid revenue growth than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Next Science's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Next Science after today.
Need some more information? At least one of Next Science's twin analysts has provided estimates out to 2024, which can be seen for free on our platform here.
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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