Market forces rained on the parade of Lannet Company, Inc. (NYSE:LCI) shareholders today when analysts lowered their guidance for this year. Both revenue and earnings per share (EPS) forecasts have been lowered as analysts see gray clouds on the horizon.
Following the downgrade, the consensus of twin analysts covering Lannett Company is for revenue of US$289 million in 2023, implying a steep 15% drop in sales from the past 12 months. Losses are expected to drop significantly, narrowing 72% to US$1.54. However, prior to this estimate update, the consensus was expecting revenue of $344 million and losses of $1.40 per share. So there has been quite a shift in sentiment after recent consensus updates, with analysts seriously cutting their earnings forecasts while expecting higher losses per share.
Check out our latest analysis for Lannett Company
The consensus price target fell 56% to US$1.00 as analysts were clearly concerned about the company following weaker revenue and earnings outlook.
Looking at the big picture, one way to make sense of these forecasts is to see how they compare to both past performance and industry growth estimates. Something else that stood out to us about these estimates, and that was the idea that Lannett Company’s decline is set to accelerate, with revenue expected to fall at an annualized rate of 15% through the end of 2023. This caps a historic decline of 11%. % per year over the last five years. Compare that to analyst estimates for companies in the broader industry, which suggest revenue (in total) is expected to grow 3.8% annually. So it’s pretty clear that while it has declining revenue, analysts also expect Lannett Company to suffer more than the industry as a whole.
The most important thing to note from this downgrade is that the consensus has raised its loss forecast this year, suggesting that all may not be well at Lannett Company. Unfortunately, analysts have also lowered their revenue estimates, and industry data suggests that Lannett Company’s revenue is expected to grow more slowly than the broader market. After such a drastic shift in sentiment from analysts, we would understand if readers were now a bit wary of the Lannett Company.
Even so, the longer-term trajectory of the company is far more important to the creation of shareholder value. We have analyst estimates for Lannett Company going out to 2025, and you can view them for free on our platform here.
Another way to search for interesting businesses that might be reach an inflection point is to track whether management is buying or selling, with our free list of growing companies insiders are buying.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
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