Downgrade: Here's How Analysts See Molecular Partners AG (VTX:MOLN) Performing In The Near Term

Market forces rained on the parade of Molecular Partners AG (VTX:MOLN) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the most recent consensus for Molecular Partners from its five analysts is for revenues of CHF33m in 2020 which, if met, would be a sizeable 129% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 30% to CHF1.56. Yet prior to the latest estimates, the analysts had been forecasting revenues of CHF42m and losses of CHF1.28 per share in 2020. 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 lifted 6.5% to CHF27.50, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer term. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Molecular Partners, with the most bullish analyst valuing it at CHF34.00 and the most bearish at CHF20.00 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Molecular Partners' past performance and to peers in the same industry. For example, we noticed that Molecular Partners' rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 129%, well above its historical decline of 14% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 22% next year. Not only are Molecular Partners' 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 take away is that analysts increased their loss per share estimates for this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of Molecular Partners.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Molecular Partners analysts - 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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