Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) Just Reported And Analysts Have Been Cutting Their Estimates
Investors in Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) had a good week, as its shares rose 5.4% to close at US$26.51 following the release of its yearly results. It was a moderately negative result overall - revenue fell 3.2% short of analyst estimates at US$27m, and statutory losses were in line with analyst expectations, at US$6.33 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for Agios Pharmaceuticals
Taking into account the latest results, the consensus forecast from Agios Pharmaceuticals' nine analysts is for revenues of US$43.1m in 2024. This reflects a huge 61% improvement in revenue compared to the last 12 months. Losses are forecast to narrow 7.5% to US$5.80 per share. Before this latest report, the consensus had been expecting revenues of US$70.6m and US$5.20 per share in losses. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.
The average price target was broadly unchanged at US$40.83, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Agios Pharmaceuticals analyst has a price target of US$49.00 per share, while the most pessimistic values it at US$29.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Agios Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 61% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 51% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 17% annually. Not only are Agios Pharmaceuticals' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded Agios Pharmaceuticals' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Agios Pharmaceuticals. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Agios Pharmaceuticals going out to 2026, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 2 warning signs for Agios Pharmaceuticals that you need to be mindful of.
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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.
