One Microbix Biosystems Inc. (TSE:MBX) Analyst Just Made A Major Cut To Next Year's Estimates

One thing we could say about the covering analyst on Microbix Biosystems Inc. (TSE:MBX) - 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 analyst seeing grey clouds on the horizon. Bidders are definitely seeing a different story, with the stock price of CA$0.84 reflecting a 20% rise in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

Following the downgrade, the latest consensus from Microbix Biosystems' single analyst is for revenues of CA$25m in 2022, which would reflect a substantial 36% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 62% to CA$0.04. Prior to this update, the analyst had been forecasting revenues of CA$29m and earnings per share (EPS) of CA$0.048 in 2022. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a real cut to earnings per share numbers as well.

View our latest analysis for Microbix Biosystems

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Microbix Biosystems' rate of growth is expected to accelerate meaningfully, with the forecast 36% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 7.5% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 75% annually. So it's clear that despite the acceleration in growth, Microbix Biosystems is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Microbix Biosystems' revenues are expected to grow slower than the wider market. After a cut like that, investors could be forgiven for thinking the analyst is a lot more bearish on Microbix Biosystems, and a few readers might choose to steer clear of the stock.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Microbix Biosystems going out as far as 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.

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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.