The Affimed N.V. (NASDAQ:AFMD) Analysts Have Been Trimming Their Sales Forecasts

One thing we could say about the analysts on Affimed N.V. (NASDAQ:AFMD) - 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.

Following the latest downgrade, the nine analysts covering Affimed provided consensus estimates of €9.7m revenue in 2023, which would reflect a concerning 71% decline on its sales over the past 12 months. Per-share losses are expected to creep up to €0.78. Yet prior to the latest estimates, the analysts had been forecasting revenues of €19m and losses of €0.76 per share in 2023. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Affimed

The consensus price target fell 6.9% to €5.48, implicitly signalling that lower earnings per share are a leading indicator for Affimed's 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. Currently, the most bullish analyst values Affimed at €11.86 per share, while the most bearish prices it at €0.91. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 92% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 18% 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 15% per year. It's pretty clear that Affimed's revenues are expected to perform substantially worse than 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 Affimed. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Affimed'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 Affimed's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Affimed after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Affimed analysts - going out to 2025, and you can see them 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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