MedinCell S.A. (EPA:MEDCL) Analysts Are More Bearish Than They Used To Be

The latest analyst coverage could presage a bad day for MedinCell S.A. (EPA:MEDCL), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business. Surprisingly the share price has been buoyant, rising 14% to €15.10 in the past 7 days. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

After this downgrade, MedinCell's five analysts are now forecasting revenues of €28m in 2025. This would be a substantial 134% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 56% to €0.38 per share. Yet before this consensus update, the analysts had been forecasting revenues of €36m and losses of €0.27 per share in 2025. 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 MedinCell

Analysts lifted their price target 7.6% to €20.70, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting MedinCell's growth to accelerate, with the forecast 134% annualised growth to the end of 2025 ranking favourably alongside historical growth of 22% per annum 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 5.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that MedinCell is expected to grow much faster than its industry.

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, although our data indicates revenues are expected to perform better than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of MedinCell.

There might be good reason for analyst bearishness towards MedinCell, like 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 backed by insiders.

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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.

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