MorphoSys AG (ETR:MOR) Analysts Are More Bearish Than They Used To Be

Market forces rained on the parade of MorphoSys AG (ETR:MOR) shareholders today, when the analysts downgraded their forecasts for next 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 latest consensus from MorphoSys' ten analysts is for revenues of €303m in 2023, which would reflect a sizeable 22% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 71% to €7.37. However, before this estimates update, the consensus had been expecting revenues of €323m and €7.04 per share in losses. Overall it looks as though the analysts are negative in this update. Although sales forecasts held steady, the consensus also made a moderate increase in to its losses per share forecasts.

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The consensus price target fell 5.5% to €27.70, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. Currently, the most bullish analyst values MorphoSys at €65.00 per share, while the most bearish prices it at €13.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that MorphoSys' revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 17% growth on an annualised basis. This is compared to a historical growth rate of 24% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 26% per year. Factoring in the forecast slowdown in growth, it seems obvious that MorphoSys is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for MorphoSys going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.