Bearish: Analysts Just Cut Their XOMA Corporation (NASDAQ:XOMA) Revenue and EPS estimates

Market forces rained on the parade of XOMA Corporation (NASDAQ:XOMA) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, the three analysts covering XOMA provided consensus estimates of US$16m revenue in 2022, which would reflect a concerning 61% decline on its sales over the past 12 months. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of US$0.58 per share in 2022. Yet before this consensus update, the analysts had been forecasting revenues of US$21m and losses of US$0.37 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.

See our latest analysis for XOMA

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the XOMA's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 84% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 0.2% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 15% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - XOMA is expected to lag 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 XOMA. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that XOMA's revenues are expected to grow slower than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on XOMA, and their negativity could be grounds for caution.

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 XOMA 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.