What You Need To Know About The PureTech Health plc (LON:PRTC) Analyst Downgrade Today

Today is shaping up negative for PureTech Health plc (LON:PRTC) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the consensus from PureTech Health's four analysts is for revenues of US$11m in 2022, which would reflect a concerning 42% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing US$12m of revenue in 2022. It looks like forecasts have become a fair bit less optimistic on PureTech Health, given the substantial drop in revenue estimates.

View our latest analysis for PureTech Health

We'd point out that there was no major changes to their price target of US$7.81, suggesting the latest estimates were not enough to shift their view on the value of the business. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic PureTech Health analyst has a price target of US$9.29 per share, while the most pessimistic values it at US$4.84. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. We would highlight that sales are expected to reverse, with a forecast 67% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 16% 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 15% per year. It's pretty clear that PureTech Health's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for PureTech Health this year. They're also anticipating slower revenue growth than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on PureTech Health after today.

Want to learn more? At least one of PureTech Health's four analysts has provided estimates out to 2024, which can be seen for 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.