Today is shaping up negative for Jacobio Pharmaceuticals Group Co., Ltd. (HKG:1167) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. Surprisingly the share price has been buoyant, rising 19% to HK$5.25 in the past 7 days. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

After the downgrade, the two analysts covering Jacobio Pharmaceuticals Group are now predicting revenues of CN¥175m in 2022. If met, this would reflect a solid 17% improvement in sales compared to the last 12 months. Losses are supposed to balloon 21% to CN¥0.46 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of CN¥200m and losses of CN¥0.41 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.

Check out our latest analysis for Jacobio Pharmaceuticals Group

The consensus price target fell 9.4% to CN¥11.15, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Jacobio Pharmaceuticals Group, with the most bullish analyst valuing it at CN¥19.09 and the most bearish at CN¥6.46 per share. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Jacobio Pharmaceuticals Group is forecast to grow faster in the future than it has in the past, with revenues expected to display 17% annualised growth until the end of 2022. If achieved, this would be a much better result than the 72% annual decline over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 40% per year. Although Jacobio Pharmaceuticals Group's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader 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 Jacobio Pharmaceuticals Group. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Jacobio Pharmaceuticals Group's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Jacobio Pharmaceuticals Group.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Jacobio Pharmaceuticals Group's financials, such as recent substantial insider selling. For more information, you can click here to discover this and the 2 other concerns we've identified.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.