Analysts Just Shaved Their Alvotech (NASDAQ:ALVO) Forecasts Dramatically

The analysts covering Alvotech (NASDAQ:ALVO) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. The stock price has risen 4.1% to US$9.94 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.

After this downgrade, Alvotech's five analysts are now forecasting revenues of US$174m in 2023. This would be a sizeable 168% improvement in sales compared to the last 12 months. Losses are expected to be contained, narrowing 17% per share from last year to US$1.29 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$216m and losses of US$0.81 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 Alvotech

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. For example, we noticed that Alvotech's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 168% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 16% a year over the past year. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 15% annually. So it looks like Alvotech is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After a cut like that, investors could be forgiven for thinking analysts are a lot more bearish on Alvotech, and a few readers might choose to steer clear of the stock.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Alvotech, including dilutive stock issuance over the past year. For more information, you can click here to discover this and the 1 other flag 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.