Industry Analysts Just Made A Sizeable Upgrade To Their Revolution Medicines, Inc. (NASDAQ:RVMD) Revenue Forecasts
Revolution Medicines, Inc. (NASDAQ:RVMD) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that Revolution Medicines will make substantially more sales than they'd previously expected.
Following the latest upgrade, the current consensus, from the nine analysts covering Revolution Medicines, is for revenues of US$15m in 2023, which would reflect a substantial 58% reduction in Revolution Medicines' sales over the past 12 months. Losses are supposed to balloon 45% to US$3.45 per share. However, before this estimates update, the consensus had been expecting revenues of US$12m and US$3.43 per share in losses. So there's definitely been a change in sentiment in this update, with the analysts upgrading this year's revenue estimates, while at the same time holding losses per share steady.
Check out our latest analysis for Revolution Medicines
The consensus price target rose 10% to US$34.57, with the analysts encouraged by the improved revenue outlook even though the company remains lossmaking.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Over the past three years, revenues have declined around 17% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 82% decline in revenue until the end of 2023. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 15% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Revolution Medicines to suffer worse than the wider industry.
The Bottom Line
The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Revolution Medicines' prospects. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Revolution Medicines.
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 Revolution Medicines 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 upgrading 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.
