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Growth Investors: Industry Analysts Just Upgraded Their Xencor, Inc. (NASDAQ:XNCR) Revenue Forecasts By 22%

Simply Wall St

Xencor, Inc. (NASDAQ:XNCR) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The revenue forecast for this year has experienced a facelift, with the analysts now much more optimistic on its sales pipeline. Investors have been pretty optimistic on Xencor too, with the stock up 14% to US$33.21 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

After this upgrade, Xencor's eleven analysts are now forecasting revenues of US$86m in 2020. This would be a solid 12% improvement in sales compared to the last 12 months. Losses are supposed to balloon 47% to US$1.59 per share. However, before this estimates update, the consensus had been expecting revenues of US$71m and US$1.64 per share in losses. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

View our latest analysis for Xencor

NasdaqGM:XNCR Past and Future Earnings May 11th 2020
NasdaqGM:XNCR Past and Future Earnings May 11th 2020

There was no major change to the consensus price target of US$43.45, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Xencor analyst has a price target of US$56.00 per share, while the most pessimistic values it at US$21.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Xencor's past performance and to peers in the same industry. We would highlight that Xencor's revenue growth is expected to slow, with forecast 12% increase next year well below the historical 31% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 22% next year. Factoring in the forecast slowdown in growth, it seems obvious that Xencor is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Xencor'sprospects. 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 Xencor.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Xencor analysts - going out to 2024, 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.