Analyst Forecasts For Cyclopharm Limited (ASX:CYC) Are Surging Higher

Celebrations may be in order for Cyclopharm Limited (ASX:CYC) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investor sentiment seems to be improving too, with the share price up 5.3% to AU$1.58 over the past 7 days. Could this big upgrade push the stock even higher?

After this upgrade, Cyclopharm's dual analysts are now forecasting revenues of AU$21m in 2022. This would be a reasonable 4.5% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 52% to AU$0.026. Yet prior to the latest estimates, the analysts had been forecasting revenues of AU$18m and losses of AU$0.066 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

Check out our latest analysis for Cyclopharm

The consensus price target rose 27% to US$1.68, with the analysts encouraged by the higher revenue and lower forecast losses for this year. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Cyclopharm analyst has a price target of US$3.03 per share, while the most pessimistic values it at US$1.60. 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 Cyclopharm's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 4.5% growth on an annualised basis. This is compared to a historical growth rate of 6.3% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 12% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Cyclopharm.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Cyclopharm's prospects. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Cyclopharm could be worth investigating further.

That's a pretty serious upgrade, but shareholders might be even more pleased to know that forecasts expect Cyclopharm to be able to reach break-even within the next few years. For more information, you can click through to our free platform to learn more about these forecasts.

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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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.