What You Need To Know About The LumiraDx Limited (NASDAQ:LMDX) Analyst Downgrade Today

Market forces rained on the parade of LumiraDx Limited (NASDAQ:LMDX) shareholders today, when the analysts downgraded their forecasts for next year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. The stock price has risen 8.1% to US$1.08 over the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the latest downgrade, the four analysts covering LumiraDx provided consensus estimates of US$204m revenue in 2023, which would reflect a concerning 39% decline on its sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$265m in 2023. It looks like forecasts have become a fair bit less optimistic on LumiraDx, given the sizeable cut to revenue estimates.

Check out our latest analysis for LumiraDx

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 32% by the end of 2023. This indicates a significant reduction from annual growth of 56% 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 7.4% per year. It's pretty clear that LumiraDx's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for next year. They also expect company revenue to perform worse than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on LumiraDx after today.

That said, the analysts might have good reason to be negative on LumiraDx, given dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other risks we've identified.

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.