Market forces rained on the parade of SCYNEXIS, Inc. (NASDAQ:SCYX) shareholders today, when the analysts downgraded their forecasts for next year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. The stock price has risen 4.6% to US$4.81 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.
After the downgrade, the six analysts covering SCYNEXIS are now predicting revenues of US$20m in 2022. If met, this would reflect a sizeable 55% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$2.48 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$24m and losses of US$2.39 per share in 2022. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that SCYNEXIS' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 42% growth on an annualised basis. This is compared to a historical growth rate of 86% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.1% annually. So it's pretty clear that, while SCYNEXIS' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at SCYNEXIS. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on SCYNEXIS after today.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple SCYNEXIS analysts - going out to 2024, 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.
Valuation is complex, but we're helping make it simple.
Find out whether SCYNEXIS is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.