Lannett Company, Inc. (NYSE:LCI) Analysts Just Slashed This Year's Estimates

Today is shaping up negative for Lannett Company, Inc. (NYSE:LCI) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the two analysts covering Lannett Company provided consensus estimates of US$289m revenue in 2023, which would reflect a considerable 15% decline on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 72% to US$1.54. However, before this estimates update, the consensus had been expecting revenues of US$344m and US$1.40 per share in losses. 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 Lannett Company

The consensus price target fell 56% to US$1.00, implicitly signalling that lower earnings per share are a leading indicator for Lannett Company's valuation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One more thing stood out to us about these estimates, and it's the idea that Lannett Company's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 15% to the end of 2023. This tops off a historical decline of 11% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 3.8% per year. So while a broad number of companies are forecast to grow, unfortunately Lannett Company is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2025, which can be seen 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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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.