Analysts Just Made A Major Revision To Their Molecular Partners AG (VTX:MOLN) Revenue Forecasts

Market forces rained on the parade of Molecular Partners AG (VTX:MOLN) shareholders today, when the analysts downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Investors however, have been notably more optimistic about Molecular Partners recently, with the stock price up an impressive 16% to CHF27.25 in the past week. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.

Following the downgrade, the latest consensus from Molecular Partners' five analysts is for revenues of CHF55m in 2021, which would reflect a major 486% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 76% to CHF0.61. Yet before this consensus update, the analysts had been forecasting revenues of CHF76m and losses of CHF0.58 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.

See our latest analysis for Molecular Partners

The consensus price target was broadly unchanged at CHF27.00, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Molecular Partners at CHF50.00 per share, while the most bearish prices it at CHF20.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that Molecular Partners' rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 486%, well above its historical decline of 17% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 37% per year. So it looks like Molecular Partners is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Molecular Partners. 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 this year's forecasts, we'd be feeling a little more wary of Molecular Partners going forwards.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Molecular Partners analysts - going out to 2025, 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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