Newsflash: Nova Eye Medical Limited (ASX:EYE) Analysts Have Been Trimming Their Revenue Forecasts
The analysts covering Nova Eye Medical Limited (ASX:EYE) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. At AU$0.22, shares are up 7.3% in the past 7 days. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.
After the downgrade, the dual analysts covering Nova Eye Medical are now predicting revenues of AU$22m in 2024. If met, this would reflect a decent 17% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 85% to AU$0.0093. Yet before this consensus update, the analysts had been forecasting revenues of AU$26m and losses of AU$0.0093 per share in 2024. 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 making no real change to the loss per share numbers.
Check out our latest analysis for Nova Eye Medical
The consensus price target fell 9.1% to AU$0.50, with the analysts clearly concerned about the weaker revenue outlook and expectation of ongoing losses.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Nova Eye Medical's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 37% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 17% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 11% annually. Not only are Nova Eye Medical's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Nova Eye Medical's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Nova Eye Medical going forwards.
There might be good reason for analyst bearishness towards Nova Eye Medical, like dilutive stock issuance over the past year. Learn more, and discover the 2 other warning signs we've identified, 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.
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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.
