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

One thing we could say about the analysts on Mithra Pharmaceuticals SA (EBR:MITRA) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the current consensus from Mithra Pharmaceuticals' four analysts is for revenues of €62m in 2021 which - if met - would reflect a substantial 231% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 65% to €0.89. Yet prior to the latest estimates, the analysts had been forecasting revenues of €72m and losses of €0.47 per share in 2021. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out our latest analysis for Mithra Pharmaceuticals

There was no major change to the consensus price target of €34.73, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Mithra Pharmaceuticals analyst has a price target of €40.43 per share, while the most pessimistic values it at €32.00. This is a very narrow spread of estimates, implying either that Mithra Pharmaceuticals is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Mithra Pharmaceuticals' growth to accelerate, with the forecast 231% annualised growth to the end of 2021 ranking favourably alongside historical growth of 14% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.4% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Mithra Pharmaceuticals is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Mithra Pharmaceuticals.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. 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.

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.

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