Need To Know: Analysts Are Much More Bullish On Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM) Revenues
Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM) 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 Rhythm Pharmaceuticals will make substantially more sales than they'd previously expected. The market may be pricing in some blue sky too, with the share price gaining 38% to US$24.32 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
Following the upgrade, the current consensus from Rhythm Pharmaceuticals' nine analysts is for revenues of US$84m in 2023 which - if met - would reflect a substantial 92% increase on its sales over the past 12 months. Losses are forecast to hold steady at around US$3.23 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$66m and losses of US$3.27 per share in 2023. So there's been quite a change-up of views after the recent consensus updates, withthe analysts noticeably increasing their revenue forecasts while also expecting losses per share to hold steady.
Check out our latest analysis for Rhythm Pharmaceuticals
There were no major changes to the US$38.22 consensus price target despite the higher revenue estimates, with the analysts seeming to believe that ongoing losses have a larger impact on the valuation than growing sales. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Rhythm Pharmaceuticals at US$52.00 per share, while the most bearish prices it at US$27.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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 Rhythm Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with the forecast 269% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 91% 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 16% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Rhythm Pharmaceuticals is expected to grow much faster than its 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 Rhythm Pharmaceuticals' prospects. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Rhythm Pharmaceuticals.
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 Rhythm Pharmaceuticals analysts - going out to 2025, and you can see them free on our platform here.
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.
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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.
