News Flash: 10 Analysts Think Keymed Biosciences Inc. (HKG:2162) Earnings Are Under Threat

The analysts covering Keymed Biosciences Inc. (HKG:2162) 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 latest downgrade, the current consensus, from the ten analysts covering Keymed Biosciences, is for revenues of CN¥115m in 2024, which would reflect a substantial 68% reduction in Keymed Biosciences' sales over the past 12 months. Per-share losses are expected to explode, reaching CN¥2.93 per share. Yet before this consensus update, the analysts had been forecasting revenues of CN¥276m and losses of CN¥1.90 per share in 2024. 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.

Check out our latest analysis for Keymed Biosciences

The consensus price target fell 20% to CN¥54.48, implicitly signalling that lower earnings per share are a leading indicator for Keymed Biosciences' valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Keymed Biosciences, with the most bullish analyst valuing it at CN¥63.14 and the most bearish at CN¥48.74 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

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 68% by the end of 2024. This indicates a significant reduction from annual growth of 79% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 26% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Keymed Biosciences is expected to lag 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 Keymed Biosciences. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Keymed Biosciences.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Keymed Biosciences going out to 2026, and you can see them 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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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.