Analysts Have Lowered Expectations For HLS Therapeutics Inc. (TSE:HLS) After Its Latest Results

It's shaping up to be a tough period for HLS Therapeutics Inc. (TSE:HLS), which a week ago released some disappointing first-quarter results that could have a notable impact on how the market views the stock. The numbers were weak, with revenues of US$12m coming in 15% short of analyst estimates. Statutory losses were US$0.19 per share, 2.7% larger than what the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on HLS Therapeutics after the latest results.

View our latest analysis for HLS Therapeutics

After the latest results, the consensus from HLS Therapeutics' three analysts is for revenues of US$58.1m in 2024, which would reflect a noticeable 4.4% decline in revenue compared to the last year of performance. Losses are predicted to fall substantially, shrinking 32% to US$0.60. Before this latest report, the consensus had been expecting revenues of US$64.1m and US$0.54 per share in losses. So it's pretty clear the analysts have mixed opinions on HLS Therapeutics after this update; revenues were downgraded and per-share losses expected to increase.

The consensus price target fell 9.1% to CA$5.59, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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 CA$10.62 per share, while the most pessimistic values it at CA$3.75. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the HLS Therapeutics' past performance and to peers in the same industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 5.9% by the end of 2024. This indicates a significant reduction from annual growth of 2.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 9.1% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - HLS Therapeutics is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for HLS Therapeutics going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for HLS Therapeutics that you should be aware of.

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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.