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The Consensus EPS Estimates For Next Science Limited (ASX:NXS) Just Fell A Lot

Simply Wall St

One thing we could say about the covering analyst on Next Science Limited (ASX:NXS) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.

Following the downgrade, the current consensus from Next Science's single analyst is for revenues of US$4.3m in 2020 which - if met - would reflect a substantial 55% increase on its sales over the past 12 months. Losses are forecast to hold steady at around US$0.068. Yet before this consensus update, the analyst had been forecasting revenues of US$8.2m and losses of US$0.049 per share in 2020. Ergo, there's been a clear change in sentiment, with the analyst administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out our latest analysis for Next Science

earnings-and-revenue-growth
earnings-and-revenue-growth

The consensus price target fell 9.8% to US$1.82, with the analyst clearly concerned about the company following the weaker revenue and earnings outlook.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Next Science's past performance and to peers in the same industry. One thing stands out from these estimates, which is that Next Science is forecast to grow faster in the future than it has in the past, with revenues expected to grow 55%. If achieved, this would be a much better result than the 38% annual decline over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 14% per year. So it looks like Next Science is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Next Science. While the analyst did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Next Science.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2022, 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.