What You Need To Know About The VIQ Solutions Inc. (TSE:VQS) Analyst Downgrade Today

One thing we could say about the analysts on VIQ Solutions Inc. (TSE:VQS) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After this downgrade, VIQ Solutions' four analysts are now forecasting revenues of US$34m in 2021. This would be a satisfactory 5.6% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 54% to US$0.14. Yet before this consensus update, the analysts had been forecasting revenues of US$40m and losses of US$0.044 per share in 2021. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for VIQ Solutions

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 pretty clear that there is an expectation that VIQ Solutions' revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 7.6% growth on an annualised basis. This is compared to a historical growth rate of 31% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 12% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than VIQ Solutions.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that VIQ Solutions' revenues are expected to grow slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on VIQ Solutions after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple VIQ Solutions analysts - going out to 2022, 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.

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