Analysts Just Slashed Their Broncus Holding Corporation (HKG:2216) EPS Numbers

The analysts covering Broncus Holding Corporation (HKG:2216) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the downgrade, the most recent consensus for Broncus Holding from its three analysts is for revenues of US$15m in 2022 which, if met, would be a substantial 34% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 76% to US$0.097. However, before this estimates update, the consensus had been expecting revenues of US$19m and US$0.087 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

View our latest analysis for Broncus Holding

The consensus price target fell 12% to US$1.00, implicitly signalling that lower earnings per share are a leading indicator for Broncus Holding's valuation. 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 Broncus Holding analyst has a price target of US$13.52 per share, while the most pessimistic values it at US$4.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Broncus Holding's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 34% growth on an annualised basis. This is compared to a historical growth rate of 113% over the past year. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 44% 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 Broncus Holding.

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 Broncus Holding's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Broncus Holding.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Broncus Holding analysts - going out to 2024, 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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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.