One thing we could say about the analysts on Cytosorbents Corporation (NASDAQ:CTSO) - 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 analysts seeing grey clouds on the horizon.
Following the latest downgrade, the three analysts covering Cytosorbents provided consensus estimates of US$35m revenue in 2022, which would reflect a small 7.1% decline on its sales over the past 12 months. Losses are forecast to narrow 8.1% to US$0.75 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$40m and losses of US$0.56 per share in 2022. 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 5.8% to US$8.17, implicitly signalling that lower earnings per share are a leading indicator for Cytosorbents' 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. Currently, the most bullish analyst values Cytosorbents at US$9.00 per share, while the most bearish prices it at US$7.50. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 14% by the end of 2022. This indicates a significant reduction from annual growth of 24% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.8% per year. It's pretty clear that Cytosorbents' revenues are expected to perform substantially worse than the wider industry.
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 Cytosorbents. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Cytosorbents' revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Cytosorbents.
There might be good reason for analyst bearishness towards Cytosorbents, like a short cash runway. For more information, you can click here to discover this and the 2 other concerns we've identified.
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.
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