Next Science (ASX:NXS) share price swings on lowered earnings update

The Next Science share price went into a spin after a lowered earnings guidance sent investors running.

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The Next Science Ltd (ASX: NXS) share price went from red to green before finishing back in the red during afternoon trade.

At 3pm, shares in the company were trading for $1.80 – down 1.1% – before rising to $1.87 within half an hour. Just 8 minutes later, however, the Next Science share price was even deeper in the red than before. It ended the day at $1.76 – down 3.3%.

The volatile price movement came after the technology company announced it was lowering forecasted revenue for the second half of FY21.

Let's take a closer look at today's update.

Earnings forecast drops

In a statement to the ASX, Next Science said it expected revenue for the first half of calendar year 2021 to be between $3.5 million and $4 million.

Judith Mitchell, managing director of Next Science, said of the figure:

We expect H1 2021 revenue to exceed total revenue for FY 2020 and our growth rate will be at least 230% on the prior corresponding period.

However, back in January this year, Next Science said it expected the earnings trajectory from Q2 to continue into the second half of this financial year. Earnings for that period were $2.3 million and the announcement sent the Next Science share price 8% higher that day.

Extrapolating this figure, Next Science predicted revenue for the second half of the financial year to be $4.6 million. From today's announcement, that means the current projection is 13% lower at best and 24% lower at worst.

Investors responded to the updated numbers by sending the Next Science share price seesawing.

Next Science share price snapshot

Over the past 12 months, the Next Science share price has increased 29.3%. However, it has not fully recovered since the COVID market crash of March 2020. On 5 March that year, Next Science shares were trading for $2.19. Over the previous 12 months, the highest price these same shares have traded at is $2.06.

Next Science has a market capitalisation of around $350 million.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Next Science Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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