The Next Science Limited (ASX:NXS) Analysts Have Been Trimming Their Sales Forecasts

Market forces rained on the parade of Next Science Limited (ASX:NXS) shareholders today, when the analysts downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the latest consensus from Next Science's dual analysts is for revenues of US$11m in 2022, which would reflect a meaningful 8.2% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$16m in 2022. It looks like forecasts have become a fair bit less optimistic on Next Science, given the sizeable cut to revenue estimates.

See 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. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. 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. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. 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. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 11% per year. 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 most important thing to take away is that analysts cut their revenue estimates for this year. Analysts also expect revenues to grow faster than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Next Science going forwards.

Want to learn more? At least one of Next Science's dual analysts has provided estimates out to 2024, 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.

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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.