Some ChromaDex Corporation (NASDAQ:CDXC) Analysts Just Made A Major Cut To Next Year's Estimates

The latest analyst coverage could presage a bad day for ChromaDex Corporation (NASDAQ:CDXC), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the downgrade, the latest consensus from ChromaDex's five analysts is for revenues of US$79m in 2022, which would reflect a decent 18% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 26% to US$0.29. However, before this estimates update, the consensus had been expecting revenues of US$99m and US$0.12 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out our latest analysis for ChromaDex

The consensus price target fell 30% to US$11.00, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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 ChromaDex, with the most bullish analyst valuing it at US$17.00 and the most bearish at US$7.00 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the ChromaDex's past performance and to peers in the same industry. We would highlight that ChromaDex's revenue growth is expected to slow, with the forecast 18% annualised growth rate until the end of 2022 being well below the historical 28% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.7% annually. Even after the forecast slowdown in growth, it seems obvious that ChromaDex is also expected to grow faster 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 ChromaDex. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of ChromaDex.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple ChromaDex analysts - going out to 2024, and you can see them 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.

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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.