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These Analysts Just Made A Decent Downgrade To Their Mirati Therapeutics, Inc. (NASDAQ:MRTX) EPS Forecasts

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One thing we could say about the analysts on Mirati Therapeutics, Inc. (NASDAQ:MRTX) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the downgrade, the current consensus from Mirati Therapeutics' ten analysts is for revenues of US$14m in 2021 which - if met - would reflect a notable 10% increase on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$12.18 per share. However, before this estimates update, the consensus had been expecting revenues of US$17m and US$10.35 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

Check out our latest analysis for Mirati Therapeutics

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earnings-and-revenue-growth

There was no major change to the consensus price target of US$215, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Mirati Therapeutics, with the most bullish analyst valuing it at US$281 and the most bearish at US$160 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Mirati Therapeutics' growth to accelerate, with the forecast 21% annualised growth to the end of 2021 ranking favourably alongside historical growth of 14% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.2% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Mirati Therapeutics to grow faster than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Mirati Therapeutics. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Mirati Therapeutics.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Mirati Therapeutics going out to 2023, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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 (at) simplywallst.com.