What You Need To Know About The Idorsia Ltd (VTX:IDIA) Analyst Downgrade Today

The latest analyst coverage could presage a bad day for Idorsia Ltd (VTX:IDIA), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Shares are up 4.5% to CHF21.76 in the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After this downgrade, Idorsia's nine analysts are now forecasting revenues of CHF92m in 2022. This would be a sizeable 154% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching CHF3.72 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of CHF113m and losses of CHF3.60 per share in 2022. 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.

See our latest analysis for Idorsia

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Idorsia is forecast to grow faster in the future than it has in the past, with revenues expected to display 111% annualised growth until the end of 2022. If achieved, this would be a much better result than the 23% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 41% annually. Not only are Idorsia's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Idorsia. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Idorsia going forwards.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Idorsia going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.