BenevolentAI S.A. (AMS:BAI) Analysts Just Slashed This Year's Revenue Estimates By 20%

The latest analyst coverage could presage a bad day for BenevolentAI S.A. (AMS:BAI), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. At €2.38, shares are up 8.2% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the downgrade, the current consensus from BenevolentAI's four analysts is for revenues of UK£40m in 2023 which - if met - would reflect a major 280% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 77% to UK£0.32. However, before this estimates update, the consensus had been expecting revenues of UK£50m and UK£0.30 per share in losses. 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 BenevolentAI

The consensus price target fell 17% to UK£4.53, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on BenevolentAI, with the most bullish analyst valuing it at UK£8.30 and the most bearish at UK£2.00 per share. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that BenevolentAI's rate of growth is expected to accelerate meaningfully, with the forecast 280% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 21% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.7% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect BenevolentAI to grow faster 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 BenevolentAI. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of BenevolentAI's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on BenevolentAI after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for BenevolentAI going out to 2025, 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.