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Market forces rained on the parade of Microbix Biosystems Inc. (TSE:MBX) shareholders today, when the covering analyst downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business. Bidders are definitely seeing a different story, with the stock price of CA$0.84 reflecting a 20% rise in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.
After this downgrade, Microbix Biosystems' sole analyst is now forecasting revenues of CA$25m in 2022. This would be a major 36% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 62% to CA$0.04. Previously, the analyst had been modelling revenues of CA$29m and earnings per share (EPS) of CA$0.048 in 2022. Indeed, we can see that the analyst is a lot more bearish about Microbix Biosystems' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Microbix Biosystems' past performance and to peers in the same industry. The analyst is definitely expecting Microbix Biosystems' growth to accelerate, with the forecast 36% annualised growth to the end of 2022 ranking favourably alongside historical growth of 7.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 75% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Microbix Biosystems is expected to grow slower than the wider industry.
The Bottom Line
The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the serious cut to this year's outlook, it's clear that the analyst has turned more bearish on Microbix Biosystems, and we wouldn't blame shareholders for feeling a little more cautious themselves.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Microbix Biosystems going out as far as 2023, 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.