Some Analysts Just Cut Their Medical Developments International Limited (ASX:MVP) Estimates

The latest analyst coverage could presage a bad day for Medical Developments International Limited (ASX:MVP), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Shares are up 9.3% to AU$3.88 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following this downgrade, Medical Developments International's dual analysts are forecasting 2022 revenues to be AU$22m, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 39% to AU$0.16. Yet prior to the latest estimates, the analysts had been forecasting revenues of AU$26m and losses of AU$0.024 per share in 2022. 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 Medical Developments International

There was no major change to the consensus price target of AU$4.75, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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. There are some variant perceptions on Medical Developments International, with the most bullish analyst valuing it at AU$5.48 and the most bearish at AU$4.01 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Medical Developments International's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Medical Developments International's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 0.02% growth on an annualised basis. This is compared to a historical growth rate of 7.7% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 53% per year. Factoring in the forecast slowdown in growth, it seems obvious that Medical Developments International is also expected to grow slower than other industry participants.

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, and industry data suggests that Medical Developments International's revenues are expected to grow slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Medical Developments International after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Medical Developments International going out as far as 2024, and you can see them free on our platform here.

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.