Stock Analysis

These Analysts Think Danimer Scientific, Inc.'s (NYSE:DNMR) Sales Are Under Threat

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NYSE:DNMR
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The analysts covering Danimer Scientific, Inc. (NYSE:DNMR) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Investors however, have been notably more optimistic about Danimer Scientific recently, with the stock price up an extraordinary 34% to US$5.47 in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

Following the latest downgrade, Danimer Scientific's three analysts currently expect revenues in 2022 to be US$59m, approximately in line with the last 12 months. Per-share losses are expected to explode, reaching US$1.04 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$104m and losses of US$1.03 per share in 2022. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to this year's revenue estimates, while at the same time holding losses per share steady.

See our latest analysis for Danimer Scientific

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NYSE:DNMR Earnings and Revenue Growth August 17th 2022

the analysts have cut their price target 7.3% to US$8.50 per share, signalling that the declining revenue and ongoing losses are contributing to the lower valuation. 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 Danimer Scientific, with the most bullish analyst valuing it at US$12.00 and the most bearish at US$6.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Danimer Scientific's revenue growth is expected to slow, with the forecast 1.6% annualised growth rate until the end of 2022 being well below the historical 11% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.6% per year. Factoring in the forecast slowdown in growth, it seems obvious that Danimer Scientific is also expected to grow slower than other industry participants.

The Bottom Line

Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Danimer Scientific's revenues are expected to grow slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Danimer Scientific's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Danimer Scientific going forwards.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Danimer Scientific's business, like a short cash runway. For more information, you can click here to discover this and the 3 other flags we've identified.

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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About NYSE:DNMR

Danimer Scientific

Danimer Scientific, Inc., a performance polymer company, develops, produces, and provides bioplastic replacements for traditional petroleum-based plastics.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation0
Future Growth2
Past Performance0
Financial Health1
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Limited growth with worrying balance sheet.