One Forecaster Is Now More Bearish On RaySearch Laboratories AB (publ) (STO:RAY B) Than They Used To Be

The latest analyst coverage could presage a bad day for RaySearch Laboratories AB (publ) (STO:RAY B), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.

After the downgrade, the sole analyst covering RaySearch Laboratories is now predicting revenues of kr733m in 2022. If met, this would reflect a notable 14% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 96% to kr0.06. Previously, the analyst had been modelling revenues of kr874m and earnings per share (EPS) of kr1.81 in 2022. So we can see that the consensus has become notably more bearish on RaySearch Laboratories' outlook with these numbers, making a measurable cut to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

Check out our latest analysis for RaySearch Laboratories

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analyst is definitely expecting RaySearch Laboratories' growth to accelerate, with the forecast 14% annualised growth to the end of 2022 ranking favourably alongside historical growth of 3.6% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 15% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that RaySearch Laboratories is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for RaySearch Laboratories dropped from profits to a loss this year. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like the analyst has become a lot more bearish on RaySearch Laboratories, and their negativity could be grounds for caution.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for RaySearch Laboratories going out as far as 2023, 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.