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The latest analyst coverage could presage a bad day for Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB), 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.
After the downgrade, the seven analysts covering Y-mAbs Therapeutics are now predicting revenues of US$61m in 2021. If met, this would reflect a huge 196% improvement in sales compared to the last 12 months. Losses are presumed to reduce, shrinking 16% from last year to US$2.49. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$85m and losses of US$1.50 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
The consensus price target was broadly unchanged at US$58.63, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Y-mAbs Therapeutics, with the most bullish analyst valuing it at US$67.00 and the most bearish at US$45.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Y-mAbs Therapeutics shareholders.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. 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 Y-mAbs Therapeutics after the downgrade.
There might be good reason for analyst bearishness towards Y-mAbs Therapeutics, like a short cash runway. For more information, you can click here to discover this and the 4 other concerns 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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