Yahoo Finance News Flash: 3 Analysts Think Scilex Holding Company (NASDAQ:SCLX) Earnings Are Under Threat
Today is shaping up negative for Scilex Holding Company (NASDAQ:SCLX) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. Bidders are definitely seeing a different story, with the stock price of US$1.13 reflecting a 26% rise in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.
Following the downgrade, the most recent consensus for Scilex Holding from its three analysts is for revenues of US$72m in 2024 which, if met, would be a sizeable 54% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 65% to US$0.47 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$96m and losses of US$0.34 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.
See our latest analysis for Scilex Holding
The consensus price target fell 6.1% to US$5.17, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.
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. The analysts are definitely expecting Scilex Holding's growth to accelerate, with the forecast 78% annualised growth to the end of 2024 ranking favourably alongside historical growth of 13% per annum over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.6% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Scilex Holding is expected to grow much faster than its industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Scilex Holding. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Scilex Holding.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Scilex Holding analysts - going out to 2026, 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 backed by insiders.
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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.
