Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) Just Reported Annual Earnings And Analysts Are Lifting Their Estimates
There's been a notable change in appetite for Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) shares in the week since its yearly report, with the stock down 10% to US$13.46. It wasn't the greatest result, with ongoing losses and revenues of US$45m falling short of analyst predictions. The losses were a relative bright spot though, with a per-share statutory loss of US$1.58 being moderately smaller than the analysts forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for Recursion Pharmaceuticals
Taking into account the latest results, the current consensus from Recursion Pharmaceuticals' seven analysts is for revenues of US$58.3m in 2024. This would reflect a sizeable 31% increase on its revenue over the past 12 months. Per-share losses are predicted to creep up to US$1.62. Before this earnings announcement, the analysts had been modelling revenues of US$52.6m and losses of US$1.82 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
There was no major change to the consensus price target of US$12.83, 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 Recursion Pharmaceuticals analyst has a price target of US$17.00 per share, while the most pessimistic values it at US$10.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Recursion Pharmaceuticals' revenue growth is expected to slow, with the forecast 31% annualised growth rate until the end of 2024 being well below the historical 69% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 18% per year. Even after the forecast slowdown in growth, it seems obvious that Recursion Pharmaceuticals is also expected to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. The consensus price target held steady at US$12.83, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Recursion Pharmaceuticals analysts - going out to 2025, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 4 warning signs for Recursion Pharmaceuticals (1 is a bit unpleasant!) that you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
