Stock Analysis

HLS Therapeutics Inc. (TSE:HLS) Analysts Just Slashed This Year's Estimates

TSX:HLS
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One thing we could say about the analysts on HLS Therapeutics Inc. (TSE:HLS) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

After the downgrade, the four analysts covering HLS Therapeutics are now predicting revenues of US$95m in 2022. If met, this would reflect a substantial 58% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 94% to US$0.025. Before this latest update, the analysts had been forecasting revenues of US$116m and earnings per share (EPS) of US$0.28 in 2022. So we can see that the consensus has become notably more bearish on HLS Therapeutics' outlook with these numbers, making a substantial drop in this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

View our latest analysis for HLS Therapeutics

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TSX:HLS Earnings and Revenue Growth March 22nd 2022

There was no major change to the consensus price target of US$23.82, 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. The most optimistic HLS Therapeutics analyst has a price target of US$35.95 per share, while the most pessimistic values it at US$25.97. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that HLS Therapeutics is forecast to grow faster in the future than it has in the past, with revenues expected to display 58% annualised growth until the end of 2022. If achieved, this would be a much better result than the 4.1% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 14% per year. Not only are HLS Therapeutics' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for HLS Therapeutics dropped from profits to a loss this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to 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 HLS Therapeutics.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple HLS Therapeutics analysts - going out to 2024, and you can see them 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.

Valuation is complex, but we're here to simplify it.

Discover if HLS Therapeutics might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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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.