Analysts Just Made A Major Revision To Their Sage Therapeutics, Inc. (NASDAQ:SAGE) Revenue Forecasts
Market forces rained on the parade of Sage Therapeutics, Inc. (NASDAQ:SAGE) shareholders today, when the analysts downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
After the downgrade, the 20 analysts covering Sage Therapeutics are now predicting revenues of US$76m in 2023. If met, this would reflect a huge improvement in sales compared to the last 12 months. Losses are forecast to narrow 7.8% to US$9.12 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$165m and losses of US$7.97 per share in 2023. 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.
View our latest analysis for Sage Therapeutics
The consensus price target fell 36% to US$39.32, implicitly signalling that lower earnings per share are a leading indicator for Sage Therapeutics' valuation.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Sage Therapeutics' rate of growth is expected to accelerate meaningfully, with the forecast exponential annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 8.7% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 15% 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 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 Sage Therapeutics. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. 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.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Sage Therapeutics going out to 2025, 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.
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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.
