Some Mithra Pharmaceuticals SA (EBR:MITRA) Analysts Just Made A Major Cut To Next Year's Estimates

The latest analyst coverage could presage a bad day for Mithra Pharmaceuticals SA (EBR:MITRA), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Investors however, have been notably more optimistic about Mithra Pharmaceuticals recently, with the stock price up a worthy 20% to €22.50 in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

After the downgrade, the consensus from Mithra Pharmaceuticals' three analysts is for revenues of €30m in 2020, which would reflect a concerning 69% decline in sales compared to the last year of performance. Losses are forecast to narrow 3.8% to €0.69 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of €51m and losses of €0.35 per share in 2020. 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.

View our latest analysis for Mithra Pharmaceuticals

There was no major change to the consensus price target of €25.50, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Mithra Pharmaceuticals at €33.50 per share, while the most bearish prices it at €10.00. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Mithra Pharmaceuticals' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 69% revenue decline a notable change from historical growth of 36% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Mithra Pharmaceuticals is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Mithra Pharmaceuticals after the downgrade.

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 Mithra Pharmaceuticals analysts - going out to 2023, 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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