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Some Co-Diagnostics, Inc. (NASDAQ:CODX) Analysts Just Made A Major Cut To Next Year's Estimates

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The analysts covering Co-Diagnostics, Inc. (NASDAQ:CODX) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the consensus from Co-Diagnostics' three analysts is for revenues of US$68m in 2021, which would reflect an uneasy 8.3% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to tumble 56% to US$0.70 in the same period. Prior to this update, the analysts had been forecasting revenues of US$89m and earnings per share (EPS) of US$1.65 in 2021. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

Check out our latest analysis for Co-Diagnostics


The consensus price target fell 15% to US$23.00, with the weaker earnings outlook clearly leading analyst valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Co-Diagnostics analyst has a price target of US$31.00 per share, while the most pessimistic values it at US$16.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 8.3% by the end of 2021. This indicates a significant reduction from annual growth of 100% 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 8.8% annually for the foreseeable future. It's pretty clear that Co-Diagnostics' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Co-Diagnostics. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Co-Diagnostics' revenues are expected to grow 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.

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 Co-Diagnostics' financials, such as dilutive stock issuance over the past year. Learn more, and discover the 3 other warning signs we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

This article by Simply Wall St is general in nature. 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.

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