What You Need To Know About The Newron Pharmaceuticals S.p.A. (VTX:NWRN) Analyst Downgrade Today

Today is shaping up negative for Newron Pharmaceuticals S.p.A. (VTX:NWRN) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

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After the downgrade, the consensus from Newron Pharmaceuticals' five analysts is for revenues of €18m in 2025, which would reflect a painful 70% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing €23m of revenue in 2025. It looks like forecasts have become a fair bit less optimistic on Newron Pharmaceuticals, given the pretty serious reduction to revenue estimates.

View our latest analysis for Newron Pharmaceuticals

Additionally, the consensus price target for Newron Pharmaceuticals increased 69% to €32.78, showing a clear increase in optimism from the analysts involved. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Newron Pharmaceuticals at €78.06 per share, while the most bearish prices it at €12.30. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Newron Pharmaceuticals' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 91% by the end of 2025. This indicates a significant reduction from annual growth of 55% 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 4.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Newron Pharmaceuticals is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also anticipating slower revenue growth than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Newron Pharmaceuticals going forwards.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Newron Pharmaceuticals' business, like a weak balance sheet. Learn more, and discover the 1 other flag we've identified, for free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.