One thing we could say about the analysts on Ascletis Pharma Inc. (HKG:1672) - 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 analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the latest consensus from Ascletis Pharma's twin analysts is for revenues of CN¥130m in 2022, which would reflect a huge 66% improvement in sales compared to the last 12 months. Losses are supposed to balloon 30% to CN¥0.21 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of CN¥149m and losses of CN¥0.12 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.

View our latest analysis for Ascletis Pharma

The consensus price target was broadly unchanged at CN¥2.04, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Ascletis Pharma, with the most bullish analyst valuing it at CN¥2.39 and the most bearish at CN¥2.29 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Ascletis Pharma is an easy business to forecast or the underlying assumptions are obvious.

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. For example, we noticed that Ascletis Pharma's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 66% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 36% a year over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 39% per year. So it looks like Ascletis Pharma is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Ascletis Pharma.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2024, 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.

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