Analyst Forecasts Just Became More Bearish On Neptune Wellness Solutions Inc. (TSE:NEPT)

The analysts covering Neptune Wellness Solutions Inc. (TSE:NEPT) 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.

After the downgrade, the four analysts covering Neptune Wellness Solutions are now predicting revenues of CA$65m in 2022. If met, this would reflect a major 39% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of CA$65m in 2022. From what we can see, it looks like Neptune Wellness Solutions is performing in line with analyst expectations. The the analysts we track have all updated their numbers, and there were no major changes to their forecasts for this year.

See our latest analysis for Neptune Wellness Solutions

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Neptune Wellness Solutions' rate of growth is expected to accelerate meaningfully, with the forecast 39% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 3.9% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 22% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Neptune Wellness Solutions to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts reconfirmed their revenue estimates for this year, suggesting that the business is performing in line with market expectations. They're also forecasting more rapid revenue growth than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Neptune Wellness Solutions going forwards.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Neptune Wellness Solutions, including major dilution from new stock issuance in the past year. Learn more, and discover the 2 other risks we've identified, for 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.

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