Need To Know: The Consensus Just Cut Its Molecular Partners AG (VTX:MOLN) Estimates For 2023

The latest analyst coverage could presage a bad day for Molecular Partners AG (VTX:MOLN), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

After the downgrade, the consensus from Molecular Partners' four analysts is for revenues of CHF14m in 2023, which would reflect a substantial 30% decline in sales compared to the last year of performance. Losses are expected to increase substantially, hitting CHF1.70 per share. However, before this estimates update, the consensus had been expecting revenues of CHF16m and CHF1.60 per share in losses. 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.

View our latest analysis for Molecular Partners

The consensus price target fell 36% to CHF9.00, implicitly signalling that lower earnings per share are a leading indicator for Molecular Partners' 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. The most optimistic Molecular Partners analyst has a price target of CHF15.00 per share, while the most pessimistic values it at CHF6.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. We would highlight that sales are expected to reverse, with a forecast 30% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 55% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 20% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Molecular Partners is expected to lag 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 Molecular Partners' revenues are expected to grow slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Molecular Partners' future valuation. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Molecular Partners after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. 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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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.