Yahoo Finance News Flash: 2 Analysts Think Valeo Pharma Inc. (TSE:VPH) Earnings Are Under Threat
One thing we could say about the analysts on Valeo Pharma Inc. (TSE:VPH) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
Following the downgrade, the latest consensus from Valeo Pharma's two analysts is for revenues of CA$63m in 2024, which would reflect a notable 16% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 29% to CA$0.20 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of CA$74m and losses of CA$0.14 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.
Check out our latest analysis for Valeo Pharma
The consensus price target fell 39% to CA$0.50, implicitly signalling that lower earnings per share are a leading indicator for Valeo Pharma's 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 Valeo Pharma's revenue growth is expected to slow, with the forecast 16% annualised growth rate until the end of 2024 being well below the historical 51% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.7% annually. Even after the forecast slowdown in growth, it seems obvious that Valeo Pharma is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Valeo Pharma's business, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other warning signs 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.
