Newsflash: Sol-Gel Technologies Ltd. (NASDAQ:SLGL) Analysts Have Been Trimming Their Revenue Forecasts

One thing we could say about the analysts on Sol-Gel Technologies Ltd. (NASDAQ:SLGL) - 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 downgrade, the current consensus from Sol-Gel Technologies' four analysts is for revenues of US$17m in 2021 which - if met - would reflect a substantial 61% increase on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$2.05 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$20m and losses of US$1.99 per share in 2021. 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.

Check out our latest analysis for Sol-Gel Technologies

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Sol-Gel Technologies' revenue growth is expected to slow, with the forecast 61% annualised growth rate until the end of 2021 being well below the historical 86% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.8% annually. Even after the forecast slowdown in growth, it seems obvious that Sol-Gel Technologies is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Sol-Gel Technologies after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Sol-Gel Technologies 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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