News Flash: 11 Analysts Think Beam Therapeutics Inc. (NASDAQ:BEAM) Earnings Are Under Threat
One thing we could say about the analysts on Beam Therapeutics Inc. (NASDAQ:BEAM) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Investors however, have been notably more optimistic about Beam Therapeutics recently, with the stock price up an extraordinary 37% to US$43.61 in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.
After the downgrade, the consensus from Beam Therapeutics' eleven analysts is for revenues of US$64m in 2024, which would reflect a substantial 83% decline in sales compared to the last year of performance. Losses are supposed to balloon 229% to US$5.55 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$73m and losses of US$4.55 per share in 2024. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
Check out our latest analysis for Beam Therapeutics
The consensus price target was broadly unchanged at US$48.38, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.
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 83% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 81% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 18% annually for the foreseeable future. It's pretty clear that Beam Therapeutics' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Beam Therapeutics after the downgrade.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Beam Therapeutics' financials, such as dilutive stock issuance over the past year. Learn more, and discover the 3 other flags we've identified, for 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 downgrading 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.
