BioSyent Inc. (CVE:RX) shareholders are probably feeling a little disappointed, since its shares fell 4.5% to CA$3.58 in the week after its latest full-year results. It was a credible result overall, with revenues of CA$21m and statutory earnings per share of CA$0.31 both in line with analyst estimates, showing that BioSyent is executing in line with expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on BioSyent after the latest results.
Taking into account the latest results, the consensus forecast from BioSyent's dual analysts is for revenues of CA$23.2m in 2020, which would reflect a meaningful 8.3% improvement in sales compared to the last 12 months. Per-share earnings are expected to accumulate 6.5% to CA$0.33. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$24.6m and earnings per share (EPS) of CA$0.36 in 2020. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.
The consensus price target fell 23% to CA$6.00, with the weaker earnings outlook clearly leading valuation estimates.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that BioSyent's revenue growth will slow down substantially, with revenues next year expected to grow 8.3%, compared to a historical growth rate of 11% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 39% next year. Factoring in the forecast slowdown in growth, it seems obvious that BioSyent is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for BioSyent. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
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 BioSyent going out as far as 2023, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for BioSyent you should know about.
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