Analysts Just Made A Major Revision To Their CanSino Biologics Inc. (HKG:6185) Revenue Forecasts

Today is shaping up negative for CanSino Biologics Inc. (HKG:6185) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the consensus from CanSino Biologics' five analysts is for revenues of CN¥2.4b in 2022, which would reflect a concerning 45% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to plummet 87% to CN¥1.09 in the same period. Prior to this update, the analysts had been forecasting revenues of CN¥2.7b and earnings per share (EPS) of CN¥1.13 in 2022. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a minor downgrade to EPS estimates to boot.

View our latest analysis for CanSino Biologics

Despite the cuts to forecast earnings, there was no real change to the CN¥148 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values CanSino Biologics at CN¥197 per share, while the most bearish prices it at CN¥135. 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.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 55% by the end of 2022. This indicates a significant reduction from annual growth of 133% 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 13% annually for the foreseeable future. It's pretty clear that CanSino Biologics' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that CanSino Biologics' revenues are expected to grow slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on CanSino Biologics after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with CanSino Biologics, including recent substantial insider selling. Learn more, and discover the 1 other warning sign we've identified, for free on our platform here.

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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.