Analysts Just Slashed Their Chembio Diagnostics, Inc. (NASDAQ:CEMI) EPS Numbers
The analysts covering Chembio Diagnostics, Inc. (NASDAQ:CEMI) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
Following the latest downgrade, the three analysts covering Chembio Diagnostics provided consensus estimates of US$26m revenue in 2020, which would reflect a concerning 22% decline on its sales over the past 12 months. Losses are supposed to balloon 34% to US$1.25 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$35m and losses of US$1.00 per share in 2020. 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 Chembio Diagnostics
The consensus price target fell 25% to US$4.50, 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 Chembio Diagnostics, with the most bullish analyst valuing it at US$5.00 and the most bearish at US$4.00 per share. This is a very narrow spread of estimates, implying either that Chembio Diagnostics is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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. We would highlight that sales are expected to reverse, with the forecast 22% revenue decline a notable change from historical growth of 9.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 10% next year. It's pretty clear that Chembio Diagnostics' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Chembio Diagnostics' 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 Chembio Diagnostics.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Chembio Diagnostics going out to 2022, and you can see them free on our platform here.
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.
This article by Simply Wall St is general in nature. 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.
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