Time To Worry? Analysts Just Downgraded Their Photocure ASA (OB:PHO) Outlook

One thing we could say about the analysts on Photocure ASA (OB:PHO) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

After the downgrade, the twin analysts covering Photocure are now predicting revenues of kr464m in 2023. If met, this would reflect a notable 18% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 63% to kr0.99. Prior to this update, the analysts had been forecasting revenues of kr530m and earnings per share (EPS) of kr1.31 in 2023. There looks to have been a major change in sentiment regarding Photocure's prospects, with a measurable cut to revenues and the analysts now forecasting a loss instead of a profit.

See our latest analysis for Photocure

The consensus price target fell 19% to kr105, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Photocure, with the most bullish analyst valuing it at kr120 and the most bearish at kr90.00 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Photocure's past performance and to peers in the same industry. The period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 18% growth on an annualised basis. That is in line with its 19% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 5.6% per year. So it's pretty clear that Photocure is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that analysts are expecting Photocure to become unprofitable this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Photocure.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Photocure going out as far as 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.