Today is shaping up negative for Broncus Holding Corporation (HKG:2216) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the downgrade, the current consensus from Broncus Holding's three analysts is for revenues of US$15m in 2022 which - if met - would reflect a major 34% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 76% to US$0.097. However, before this estimates update, the consensus had been expecting revenues of US$19m and US$0.087 per share in losses. 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 Broncus Holding

The consensus price target fell 12% to US$1.00, implicitly signalling that lower earnings per share are a leading indicator for Broncus Holding's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Broncus Holding at US$13.52 per share, while the most bearish prices it at US$4.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. 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. We would highlight that Broncus Holding's revenue growth is expected to slow, with the forecast 34% annualised growth rate until the end of 2022 being well below the historical 113% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 44% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Broncus Holding.

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 Broncus Holding. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Broncus Holding's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Broncus Holding.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Broncus Holding analysts - going out to 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.

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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.