Mach7 Technologies Limited's (ASX:M7T) Analyst Just Slashed This Year's Estimates

Market forces rained on the parade of Mach7 Technologies Limited (ASX:M7T) shareholders today, when the covering analyst downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

Following the downgrade, the most recent consensus for Mach7 Technologies from its solo analyst is for revenues of AU$20m in 2021 which, if met, would be a notable 15% increase on its sales over the past 12 months. Per-share losses are expected to explode, reaching AU$0.044 per share. Yet prior to the latest estimates, the analyst had been forecasting revenues of AU$23m and losses of AU$0.028 per share in 2021. Ergo, there's been a clear change in sentiment, with the analyst administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Mach7 Technologies

The consensus price target fell 7.4% to AU$1.56, with the analyst clearly concerned about the company following the weaker revenue and earnings outlook.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analyst is definitely expecting Mach7 Technologies' growth to accelerate, with the forecast 33% annualised growth to the end of 2021 ranking favourably alongside historical growth of 25% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 30% per year. Mach7 Technologies is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing to take away is that the analyst increased their loss per share estimates for this year. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2023, which can be seen for 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 that insiders are buying.

If you’re looking to trade Mach7 Technologies, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.