Market forces rained on the parade of CollPlant Biotechnologies Ltd. (NASDAQ:CLGN) shareholders today, when the covering analyst downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon. Bidders are definitely seeing a different story, with the stock price of US$17.10 reflecting a 11% rise in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.
After the downgrade, the consensus from CollPlant Biotechnologies' solo analyst is for revenues of US$15m in 2021, which would reflect a stressful 24% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to dive 72% to US$0.23 in the same period. Prior to this update, the analyst had been forecasting revenues of US$33m and earnings per share (EPS) of US$1.64 in 2021. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a pretty serious decline to earnings per share numbers as well.
The analyst made no major changes to their price target of ₪84.43, suggesting the downgrades are not expected to have a long-term impact on CollPlant Biotechnologies' valuation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 30% by the end of 2021. This indicates a significant reduction from annual growth of 65% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 13% per year. It's pretty clear that CollPlant Biotechnologies' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for CollPlant Biotechnologies. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on CollPlant Biotechnologies after the downgrade.
That said, this analyst might have good reason to be negative on CollPlant Biotechnologies, given major dilution from new stock issuance in the past year. Learn more, and discover the 1 other concern 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.
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