Market forces rained on the parade of EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT) shareholders today, when the analysts downgraded their forecasts for this year.   There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.  

Following the downgrade, the consensus from eight analysts covering EyePoint Pharmaceuticals is for revenues of US$34m in 2024, implying a disturbing 26% decline in sales compared to the last 12 months.      Losses are supposed to balloon 25% to US$1.77 per share.       However, before this estimates update, the consensus had been expecting revenues of US$44m and US$1.63 per share in losses.         Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.    

NasdaqGM:EYPT Earnings and Revenue Growth March 10th 2024

There was no major change to the consensus price target of US$43.89, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts.    

Of course, another way to look at these forecasts is to place them into context against the industry itself.     These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 26% by the end of 2024. This indicates a significant reduction from annual growth of 24% over the last five years.    By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.1% annually for the foreseeable future.  So although its revenues are forecast to shrink, this cloud does not come with a silver lining - EyePoint Pharmaceuticals is expected to lag the wider industry.    

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at EyePoint Pharmaceuticals.        Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that EyePoint Pharmaceuticals' revenues are expected to grow slower than the wider market.        Given the stark change in sentiment, we'd understand if investors became more cautious on EyePoint Pharmaceuticals after today.  

Still, the long-term prospects of the business are much more relevant than next year's earnings.   We have estimates - from multiple EyePoint Pharmaceuticals analysts - going out to 2026, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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