Need To Know: Analysts Just Made A Substantial Cut To Their Affimed N.V. (NASDAQ:AFMD) Estimates

Market forces rained on the parade of Affimed N.V. (NASDAQ:AFMD) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the current consensus from Affimed's five analysts is for revenues of €33m in 2021 which - if met - would reflect a meaningful 14% increase on its sales over the past 12 months. The loss per share is expected to ameliorate slightly, reducing to €0.47. However, before this estimates update, the consensus had been expecting revenues of €30m and €0.34 per share in losses. While this year's revenue estimates increased, there was also a regrettable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

Check out our latest analysis for Affimed

It will come as a surprise to learn that the consensus price target rose 19% to €12.81, with the analysts clearly more interested in growing revenue, even as losses intensify. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Affimed, with the most bullish analyst valuing it at €18.02 and the most bearish at €14.02 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. It's pretty clear that there is an expectation that Affimed's revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 14% growth on an annualised basis. This is compared to a historical growth rate of 37% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 16% annually. So it's pretty clear that, while Affimed's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of Affimed.

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 Affimed's business, like major dilution from new stock issuance in the past year. Learn more, and discover the 2 other flags we've identified, for 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.

If you decide to trade Affimed, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.