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Growth Investors: Industry Analysts Just Upgraded Their MEI Pharma, Inc. (NASDAQ:MEIP) Revenue Forecasts By 25%

Simply Wall St
·3 min read

Shareholders in MEI Pharma, Inc. (NASDAQ:MEIP) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts have sharply increased their revenue numbers, with a view that MEI Pharma will make substantially more sales than they'd previously expected. The stock price has risen 9.4% to US$2.91 over the past week, suggesting investors are becoming more optimistic. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

Following the latest upgrade, the current consensus, from the eight analysts covering MEI Pharma, is for revenues of US$13m in 2021, which would reflect a sizeable 59% reduction in MEI Pharma's sales over the past 12 months. The loss per share is expected to ameliorate slightly, reducing to US$0.43. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$10m and losses of US$0.47 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

Check out our latest analysis for MEI Pharma

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

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. We would highlight that sales are expected to reverse, with the forecast 59% revenue decline a notable change from historical growth of 48% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 21% next year. It's pretty clear that MEI Pharma's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting MEI Pharma is moving incrementally towards profitability. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at MEI Pharma.

Analysts are clearly in love with MEI Pharma at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as major dilution from new stock issuance in the past year. For more information, you can click through to our platform to learn more about this and the 1 other warning sign we've identified .

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.