Analysts Have Just Cut Their Valeo Pharma Inc. (TSE:VPH) Revenue Estimates By 24%

The analysts covering Valeo Pharma Inc. (TSE:VPH) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. The stock price has risen 8.9% to CA$0.61 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the downgrade, the latest consensus from Valeo Pharma's three analysts is for revenues of CA$27m in 2022, which would reflect a major 51% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing CA$36m of revenue in 2022. The consensus view seems to have become more pessimistic on Valeo Pharma, noting the pretty serious reduction to revenue estimates in this update.

See our latest analysis for Valeo Pharma

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Valeo Pharma's rate of growth is expected to accelerate meaningfully, with the forecast 128% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 37% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.9% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Valeo Pharma is expected to grow much faster than its industry.

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. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Valeo Pharma going forwards.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Valeo Pharma's financials, such as dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other concerns we've identified.

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.