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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. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
After the downgrade, the consensus from Beam Therapeutics' twelve analysts is for revenues of US$42m in 2022, which would reflect a chunky 20% decline in sales compared to the last year of performance. Losses are expected to be contained, narrowing 17% from last year to US$4.48. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$56m and losses of US$4.11 per share in 2022. 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.
The consensus price target was broadly unchanged at US$119, 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 Beam Therapeutics, with the most bullish analyst valuing it at US$154 and the most bearish at US$62.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 25% by the end of 2022. This indicates a significant reduction from annual growth of 183% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 11% 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. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Beam Therapeutics' revenues are expected to grow slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Beam Therapeutics after today.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Beam Therapeutics, including dilutive stock issuance over the past year. For more information, you can click here to discover this and the 4 other flags we've identified.
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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.