One Co-Diagnostics, Inc. (NASDAQ:CODX) Analyst Just Slashed Their Estimates By A Consequential 14%

One thing we could say about the covering analyst on Co-Diagnostics, Inc. (NASDAQ:CODX) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the consensus from Co-Diagnostics' solo analyst is for revenues of US$3.6m in 2023, which would reflect a disturbing 70% decline in sales compared to the last year of performance. Losses are expected to be contained, narrowing 13% from last year to US$0.90. Yet before this consensus update, the analyst had been forecasting revenues of US$4.2m and losses of US$0.87 per share in 2023. 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 Co-Diagnostics

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 80% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 46% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.3% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Co-Diagnostics 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 Co-Diagnostics. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Co-Diagnostics after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2024, which can be seen for 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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