The Consensus EPS Estimates For Agilyx ASA (OB:AGLX) Just Fell Dramatically

Today is shaping up negative for Agilyx ASA (OB:AGLX) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the current consensus from Agilyx's three analysts is for revenues of US$19m in 2022 which - if met - would reflect a major 57% increase on its sales over the past 12 months. The loss per share is expected to ameliorate slightly, reducing to US$0.22. Yet before this consensus update, the analysts had been forecasting revenues of US$22m and losses of US$0.18 per share in 2022. 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 Agilyx

There was no major change to the consensus price target of US$6.66, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Agilyx analyst has a price target of US$93.29 per share, while the most pessimistic values it at US$50.91. 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. 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.

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 pretty clear that there is an expectation that Agilyx's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 148% growth on an annualised basis. This is compared to a historical growth rate of 236% over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue shrink 2.3% per year. So it's clear that despite the slowdown in growth, Agilyx is still expected to grow meaningfully 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 Agilyx. Unfortunately, they also downgraded their revenue estimates, and our data indicates sales are expected to outperform the wider market. Even so, earnings per share are more important to the intrinsic value of the business. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Agilyx.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Agilyx 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.