Celebrations may be in order for Keymed Biosciences Inc. (HKG:2162) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that Keymed Biosciences will make substantially more sales than they’d previously expected. Investor sentiment seems to be improving too, with the share price up 4.3% to HK$63.40 over the past 7 days. Could this big upgrade push the stock even higher?
After this upgrade, Keymed Biosciences’ eight analysts are now forecasting revenues of CN¥316m in 2023. This would be a major 216% improvement in sales compared to the last 12 months. The loss per share is expected to ameliorate slightly, reducing to CN¥1.04. Yet prior to the latest estimates, the analysts had been forecasting revenues of CN¥239m and losses of CN¥1.14 per share in 2023. We can see there’s definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year’s revenue estimates, while at the same time reducing their loss estimates.
Check out our latest analysis for Keymed Biosciences
Despite these upgrades, the analysts have not made any major changes to their price target of CN¥70.69, implying that their latest estimates don’t have a long term impact on what they think the stock is worth. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. The most optimistic Keymed Biosciences analyst has a price target of CN¥90.08 per share, while the most pessimistic values it at CN¥60.61. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Keymed Biosciences shareholders.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It’s clear from the latest estimates that Keymed Biosciences’ rate of growth is expected to accelerate meaningfully, with the forecast 216% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 87% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 34% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Keymed Biosciences to grow faster than the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Keymed Biosciences is moving incrementally towards profitability. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Keymed Biosciences.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates – from multiple Keymed Biosciences analysts – going out to 2025, and you can see them free on our platform here.
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Find out whether Keymed Biosciences is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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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.
