Stock Analysis

TTY Biopharm Company Limited (GTSM:4105) Analysts Just Cut Their EPS Forecasts Substantially

TPEX:4105
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The latest analyst coverage could presage a bad day for TTY Biopharm Company Limited (GTSM:4105), with the analysts 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 analysts seeing grey clouds on the horizon.

After the downgrade, the five analysts covering TTY Biopharm are now predicting revenues of NT$4.5b in 2021. If met, this would reflect a decent 9.0% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to jump 46% to NT$4.06. Previously, the analysts had been modelling revenues of NT$5.1b and earnings per share (EPS) of NT$4.69 in 2021. Indeed, we can see that the analysts are a lot more bearish about TTY Biopharm's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for TTY Biopharm

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GTSM:4105 Earnings and Revenue Growth January 19th 2021

The consensus price target fell 6.7% to NT$73.86, with the weaker earnings outlook clearly leading analyst valuation estimates. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on TTY Biopharm, with the most bullish analyst valuing it at NT$95.00 and the most bearish at NT$63.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting TTY Biopharm's growth to accelerate, with the forecast 9.0% growth ranking favourably alongside historical growth of 5.8% 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 21% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, TTY Biopharm is expected to grow slower than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that TTY Biopharm's revenues are expected to grow slower than the wider market. With a serious cut to next year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of TTY Biopharm.

A high debt burden combined with a downgrade of this magnitude always gives us some reason for concern, especially if these forecasts are just the first sign of a business downturn. See why we're concerned about TTY Biopharm's balance sheet by visiting our risks dashboard for free on our platform here.

You can also see our analysis of TTY Biopharm's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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