What Does The Future Hold For Shield Therapeutics plc (LON:STX)? These Analysts Have Been Cutting Their Estimates

Market forces rained on the parade of Shield Therapeutics plc (LON:STX) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. At UK£0.48, shares are up 4.9% in the past 7 days. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the consensus from four analysts covering Shield Therapeutics is for revenues of UK£7.9m in 2021, implying a concerning 24% decline in sales compared to the last 12 months. Per-share losses are expected to explode, reaching UK£0.12 per share. Yet before this consensus update, the analysts had been forecasting revenues of UK£10m and losses of UK£0.11 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.

See our latest analysis for Shield Therapeutics

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 24% by the end of 2021. This indicates a significant reduction from annual growth of 55% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 8.1% annually for the foreseeable future. It's pretty clear that Shield Therapeutics' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Shield Therapeutics. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales 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 Shield Therapeutics after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Shield Therapeutics' financials, such as a short cash runway. Learn more, and discover the 1 other concern we've identified, for 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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