Analysts Have Lowered Expectations For BioArctic AB (publ) (STO:BIOA B) After Its Latest Results

The analysts might have been a bit too bullish on BioArctic AB (publ) (STO:BIOA B), given that the company fell short of expectations when it released its second-quarter results last week. Revenues missed expectations somewhat, coming in at kr2.7m and leading to a corresponding blowout in statutory losses. The loss per share was kr1.16, some 18% larger than the analysts forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on BioArctic after the latest results.

Check out our latest analysis for BioArctic

Taking into account the latest results, the current consensus, from the four analysts covering BioArctic, is for revenues of kr585.3m in 2023. This implies a discernible 5.6% reduction in BioArctic's revenue over the past 12 months. Statutory earnings per share are forecast to nosedive 48% to kr1.60 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr709.8m and earnings per share (EPS) of kr5.70 in 2023. Indeed, we can see that the analysts are a lot more bearish about BioArctic's prospects following the latest results, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

The analysts made no major changes to their price target of kr395, suggesting the downgrades are not expected to have a long-term impact on BioArctic's valuation. 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 BioArctic analyst has a price target of kr460 per share, while the most pessimistic values it at kr356. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting BioArctic is an easy business to forecast or the the analysts are all using similar assumptions.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would also point out that the forecast 11% annualised revenue decline to the end of 2023 is better than the historical trend, which saw revenues shrink 19% annually 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 revenue grow 25% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect BioArctic to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target held steady at kr395, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on BioArctic. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple BioArctic analysts - going out to 2025, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with BioArctic , and understanding this should be part of your investment process.

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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.