Downgrade: What You Need To Know About The Latest OX2 AB (publ) (STO:OX2) Forecasts

The latest analyst coverage could presage a bad day for OX2 AB (publ) (STO:OX2), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. Shares are up 9.9% to kr45.06 in the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the most recent consensus for OX2 from its single analyst is for revenues of kr12b in 2024 which, if met, would be a major 47% increase on its sales over the past 12 months. Statutory earnings per share are presumed to ascend 16% to kr5.72. Prior to this update, the analyst had been forecasting revenues of kr14b and earnings per share (EPS) of kr5.88 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a minor downgrade to EPS estimates to boot.

View our latest analysis for OX2

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the OX2's past performance and to peers in the same industry. The analyst is definitely expecting OX2's growth to accelerate, with the forecast 36% annualised growth to the end of 2024 ranking favourably alongside historical growth of 15% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.4% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect OX2 to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. 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 OX2 after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2025, which can be seen for 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.