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Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) First-Quarter Results Just Came Out: Here's What Analysts Are Forecasting For This Year

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  • IRWD

Last week saw the newest first-quarter earnings release from Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), an important milestone in the company's journey to build a stronger business. It was a workmanlike result, with revenues of US$89m coming in 2.6% ahead of expectations, and statutory earnings per share of US$0.25, in line with analyst appraisals. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Ironwood Pharmaceuticals

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Taking into account the latest results, Ironwood Pharmaceuticals' five analysts currently expect revenues in 2021 to be US$387.6m, approximately in line with the last 12 months. Per-share earnings are expected to jump 36% to US$0.90. Before this earnings report, the analysts had been forecasting revenues of US$388.5m and earnings per share (EPS) of US$0.85 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at US$10.80, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Ironwood Pharmaceuticals, with the most bullish analyst valuing it at US$13.00 and the most bearish at US$9.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. We would highlight that sales are expected to reverse, with a forecast 0.6% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 15% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 14% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Ironwood Pharmaceuticals is expected to lag the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Ironwood Pharmaceuticals following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Ironwood Pharmaceuticals' revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$10.80, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Ironwood Pharmaceuticals going out to 2025, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 1 warning sign for Ironwood Pharmaceuticals you should know about.

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.

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