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Some Analysts Just Cut Their Sage Therapeutics, Inc. (NASDAQ:SAGE) Estimates

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Simply Wall St
·3 min read
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The analysts covering Sage Therapeutics, Inc. (NASDAQ:SAGE) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After this downgrade, Sage Therapeutics' 20 analysts are now forecasting revenues of US$16m in 2021. This would be a huge 130% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$18m in 2021. The consensus view seems to have become more pessimistic on Sage Therapeutics, noting the measurable cut to revenue estimates in this update.

View our latest analysis for Sage Therapeutics

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earnings-and-revenue-growth

We'd point out that there was no major changes to their price target of US$94.95, suggesting the latest estimates were not enough to shift their view on the value of the business. 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. There are some variant perceptions on Sage Therapeutics, with the most bullish analyst valuing it at US$190 and the most bearish at US$60.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Sage Therapeutics' growth to accelerate, with the forecast 130% growth ranking favourably alongside historical growth of 34% per annum over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 21% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Sage Therapeutics to grow faster than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Sage Therapeutics next year. They're also forecasting more rapid revenue growth than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Sage Therapeutics after today.

Thirsting for more data? We have estimates for Sage Therapeutics from its 20 analysts out until 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.