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Market forces rained on the parade of Bicycle Therapeutics plc (NASDAQ:BCYC) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Surprisingly the share price has been buoyant, rising 27% to US$19.82 in the past 7 days. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.
Following this downgrade, Bicycle Therapeutics' seven analysts are forecasting 2020 revenues to be US$8.6m, approximately in line with the last 12 months. Before the latest update, the analysts were foreseeing US$11m of revenue in 2020. The consensus view seems to have become more pessimistic on Bicycle Therapeutics, noting the substantial drop in revenue estimates in this update.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Bicycle Therapeutics' past performance and to peers in the same industry. It's also worth noting that the years of declining sales look to have come to an end, with the forecast for flat revenues next year. Historically, Bicycle Therapeutics' sales have shrunk approximately 19% annually over the past year. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 20% next year. So it's pretty clear that, although revenues are improving, Bicycle Therapeutics is still expected to grow slower than the industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Bicycle Therapeutics this year. They also expect company revenue to perform worse than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Bicycle Therapeutics after today.
That said, the analysts might have good reason to be negative on Bicycle Therapeutics, given dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other risks we've identified.
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.
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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