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The latest analyst coverage could presage a bad day for MacroGenics, Inc. (NASDAQ:MGNX), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
Following the latest downgrade, the nine analysts covering MacroGenics provided consensus estimates of US$116m revenue in 2021, which would reflect a small 2.3% decline on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$2.80 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$151m and losses of US$2.35 per share in 2021. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One more thing stood out to us about these estimates, and it's the idea that MacroGenics' decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 4.6% to the end of 2021. This tops off a historical decline of 0.7% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 10% annually. So while a broad number of companies are forecast to grow, unfortunately MacroGenics is expected to see its sales affected worse than other companies in the 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 wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on MacroGenics, and their negativity could be grounds for caution.
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 MacroGenics analysts - going out to 2023, and you can see them 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.
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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