One Analyst Just Shaved Their Irisity AB (publ) (STO:IRIS) Forecasts Dramatically

The latest analyst coverage could presage a bad day for Irisity AB (publ) (STO:IRIS), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the most recent consensus for Irisity from its lone analyst is for revenues of kr174m in 2022 which, if met, would be a substantial 56% increase on its sales over the past 12 months. Losses are forecast to hold steady at around kr1.25. Yet before this consensus update, the analyst had been forecasting revenues of kr254m and losses of kr0.75 per share in 2022. Ergo, there's been a clear change in sentiment, with the analyst administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out our latest analysis for Irisity

The consensus price target fell 5.4% to kr61.50, with the analyst clearly concerned about the company following the weaker revenue and earnings outlook.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analyst is definitely expecting Irisity's growth to accelerate, with the forecast 56% annualised growth to the end of 2022 ranking favourably alongside historical growth of 21% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect Irisity to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst increased their loss per share estimates for this year. Unfortunately, the analyst 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 the analyst, we'd understand if readers now felt a bit wary of Irisity.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Irisity going out as far as 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.

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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.