What You Need To Know About The Sol-Gel Technologies Ltd. (NASDAQ:SLGL) Analyst Downgrade Today
Market forces rained on the parade of Sol-Gel Technologies Ltd. (NASDAQ:SLGL) shareholders today, when the analysts downgraded their forecasts for next year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
After the downgrade, the four analysts covering Sol-Gel Technologies are now predicting revenues of US$26m in 2021. If met, this would reflect a sizeable 144% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$32m in 2021. The consensus view seems to have become more pessimistic on Sol-Gel Technologies, noting the substantial drop in revenue estimates in this update.
Check out our latest analysis for Sol-Gel Technologies
There was no particular change to the consensus price target of US$20.00, with Sol-Gel Technologies' latest outlook seemingly not enough to result in a change of 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. There are some variant perceptions on Sol-Gel Technologies, with the most bullish analyst valuing it at US$23.00 and the most bearish at US$16.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Sol-Gel Technologies' growth to accelerate, with the forecast 144% growth ranking favourably alongside historical growth of 86% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.6% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Sol-Gel Technologies to grow faster than the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Sol-Gel Technologies next year. They're also forecasting more rapid revenue growth than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Sol-Gel Technologies after today.
Unsatisfied? We have estimates for Sol-Gel Technologies from its four analysts out until 2024, 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. 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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