BenevolentAI S.A. (AMS:BAI) Analysts Just Trimmed Their Revenue Forecasts By 24%

One thing we could say about the analysts on BenevolentAI S.A. (AMS:BAI) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. 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 four analysts covering BenevolentAI are now predicting revenues of UK£14m in 2023. If met, this would reflect a sizeable 33% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 68% to UK£0.44. However, before this estimates update, the consensus had been expecting revenues of UK£19m and UK£0.44 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 making no real change to the loss per share numbers.

Check out our latest analysis for BenevolentAI

The consensus price target fell 12% to UK£3.18, with the analysts clearly concerned about the weaker revenue outlook and expectation of ongoing losses. 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. The most optimistic BenevolentAI analyst has a price target of UK£8.54 per share, while the most pessimistic values it at UK£1.53. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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. The analysts are definitely expecting BenevolentAI's growth to accelerate, with the forecast 33% annualised growth to the end of 2023 ranking favourably alongside historical growth of 21% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.5% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that BenevolentAI is expected to grow much faster than its industry.

The Bottom Line

Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on BenevolentAI after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with BenevolentAI's financials, such as dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other flags we've identified.

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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