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Analysts Have Just Cut Their Xenon Pharmaceuticals Inc. (NASDAQ:XENE) Revenue Estimates By 18%

Simply Wall St
·3 min read

The analysts covering Xenon Pharmaceuticals Inc. (NASDAQ:XENE) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. Investors however, have been notably more optimistic about Xenon Pharmaceuticals recently, with the stock price up a remarkable 22% to US$11.85 in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

Following the latest downgrade, the current consensus, from the eight analysts covering Xenon Pharmaceuticals, is for revenues of US$19m in 2021, which would reflect a disturbing 29% reduction in Xenon Pharmaceuticals' sales over the past 12 months. Before the latest update, the analysts were foreseeing US$24m of revenue in 2021. It looks like forecasts have become a fair bit less optimistic on Xenon Pharmaceuticals, given the substantial drop in revenue estimates.

View our latest analysis for Xenon Pharmaceuticals

earnings-and-revenue-growth
earnings-and-revenue-growth

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Xenon Pharmaceuticals' past performance and to peers in the same industry. One more thing stood out to us about these estimates, and it's the idea that Xenon Pharmaceuticals'decline is expected to accelerate, with revenues forecast to fall 29% next year, topping off a historical decline of 8.9% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 20% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Xenon Pharmaceuticals to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for next year. They also expect company revenue to perform worse than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Xenon Pharmaceuticals after today.

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 Xenon Pharmaceuticals' business, like dilutive stock issuance over the past year. Learn more, and discover the 2 other flags we've identified, for 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.