One thing we could say about the analysts on Marrone Bio Innovations, Inc. (NASDAQ:MBII) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.
Following the downgrade, the most recent consensus for Marrone Bio Innovations from its five analysts is for revenues of US$44m in 2021 which, if met, would be a meaningful 11% increase on its sales over the past 12 months. Losses are presumed to reduce, shrinking 12% from last year to US$0.09. However, before this estimates update, the consensus had been expecting revenues of US$50m and US$0.074 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.
The consensus price target fell 19% to US$2.63, implicitly signalling that lower earnings per share are a leading indicator for Marrone Bio Innovations' valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Marrone Bio Innovations analyst has a price target of US$4.00 per share, while the most pessimistic values it at US$1.65. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Marrone Bio Innovations' past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Marrone Bio Innovations'historical trends, as the 22% annualised revenue growth to the end of 2021 is roughly in line with the 24% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 4.8% annually. So although Marrone Bio Innovations is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better 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 Simply Wall St, we have a full range of analyst estimates for Marrone Bio Innovations going out to 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.
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.
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