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One thing we could say about the analysts on HLS Therapeutics Inc. (TSE:HLS) - 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) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.
After the downgrade, the five analysts covering HLS Therapeutics are now predicting revenues of US$83m in 2022. If met, this would reflect a sizeable 39% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 81% to US$0.075. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$106m and losses of US$0.025 per share in 2022. Ergo, there's been a clear change in sentiment, with the analysts 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 HLS Therapeutics
The consensus price target fell 5.4% to US$22.55, implicitly signalling that lower earnings per share are a leading indicator for HLS Therapeutics' 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 HLS Therapeutics, with the most bullish analyst valuing it at US$36.00 and the most bearish at US$25.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await HLS Therapeutics shareholders.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that HLS Therapeutics' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 39% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 4.1% a year over the past five years. 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 HLS Therapeutics is expected to grow faster than its competitors, at least for a while.