Things Look Grim For Enzymatica AB (STO:ENZY) After Today's Downgrade

One thing we could say about the analysts on Enzymatica AB (STO:ENZY) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. At kr10.30, shares are up 4.0% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the latest downgrade, the current consensus, from the dual analysts covering Enzymatica, is for revenues of kr82m in 2021, which would reflect a chunky 19% reduction in Enzymatica's sales over the past 12 months. Losses are supposed to balloon 58% to kr0.25 per share. Yet before this consensus update, the analysts had been forecasting revenues of kr97m and losses of kr0.23 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

Check out our latest analysis for Enzymatica

The consensus price target fell 22% to US$1.44, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 35% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 22% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 30% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Enzymatica is expected to lag the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Enzymatica. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Enzymatica going out as far as 2023, 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. 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.
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