One thing we could say about the analysts on Paion AG (ETR:PA8) - 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 twin analysts covering Paion are now predicting revenues of €20m in 2020. If met, this would reflect a sizeable 154% improvement in sales compared to the last 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting €0.034 in per-share earnings €0.034. Prior to this update, the analysts had been forecasting revenues of €23m and earnings per share (EPS) of €0.13 in 2020. Indeed, we can see that the analysts are a lot more bearish about Paion's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Paion

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. It's clear from the latest estimates that Paion's rate of growth is expected to accelerate meaningfully, with the forecast 154% revenue growth noticeably faster than its historical growth of 27% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 27% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Paion to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on Paion, and their negativity could be grounds for caution.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Paion, including dilutive stock issuance over the past year. Learn more, and discover the 2 other concerns we've identified, for 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.

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