These Analysts Think Sol-Gel Technologies Ltd.'s (NASDAQ:SLGL) Sales Are Under Threat

Today is shaping up negative for Sol-Gel Technologies Ltd. (NASDAQ:SLGL) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the consensus from three analysts covering Sol-Gel Technologies is for revenues of US$11m in 2022, implying a stressful 65% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$15m in 2022. The consensus view seems to have become more pessimistic on Sol-Gel Technologies, noting the pretty serious reduction to revenue estimates in this update.

See 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 sales are expected to reverse, with a forecast 75% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 50% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.0% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Sol-Gel Technologies is expected to lag the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Sol-Gel Technologies this year. They also expect company revenue to perform worse 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.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Sol-Gel Technologies' financials, such as concerns around earnings quality. For more information, you can click here to discover this and the 1 other risk we've identified.

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.