Shareholders in Cyclopharm Limited (ASX:CYC) may be thrilled to learn that the covering analyst has just delivered a major upgrade to their near-term forecasts. The analyst greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
Following the upgrade, the latest consensus from Cyclopharm's sole analyst is for revenues of AU$19m in 2021, which would reflect a credible 5.2% improvement in sales compared to the last 12 months. Losses are presumed to reduce, shrinking 11% from last year to AU$0.07. Yet before this consensus update, the analyst had been forecasting revenues of AU$17m and losses of AU$0.083 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of Cyclopharm'shistorical trends, as the 5.2% annualised revenue growth to the end of 2021 is roughly in line with the 4.9% annual revenue growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 15% annually. So it's pretty clear that Cyclopharm is expected to grow slower than similar companies in the same industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Cyclopharm is moving incrementally towards profitability. Pleasantly, the analyst also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. With a serious upgrade to expectations, it might be time to take another look at Cyclopharm.
It's great to see the analyst upgrading their estimates, but the biggest highlight to us is that the business is expected to become profitable in the foreseeable future. You can learn more about these forecasts, for free on our platform here.
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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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