These Analysts Just Made A Huge Downgrade To Their MorphoSys AG (ETR:MOR) EPS Forecasts

The analysts covering MorphoSys AG (ETR:MOR) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

After the downgrade, the consensus from MorphoSys' 14 analysts is for revenues of €231m in 2021, which would reflect a concerning 24% decline in sales compared to the last year of performance. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of €4.14 per share in 2021. Yet prior to the latest estimates, the analysts had been forecasting revenues of €295m and losses of €1.05 per share in 2021. 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 MorphoSys

There was no major change to the consensus price target of €126, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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 €170 per share, while the most bearish prices it at €88.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the MorphoSys' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 24% by the end of 2021. This indicates a significant reduction from annual growth of 33% 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 26% per year. It's pretty clear that MorphoSys' revenues are expected to perform substantially worse than the wider industry.

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 MorphoSys. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that MorphoSys' revenues are expected to grow slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of MorphoSys.

Unfortunately, by using these new estimates as a starting point, we've run a discounted cash flow calculation (DCF) on MorphoSys that suggests the company could be somewhat overvalued. Find out why, and see how we estimate the valuation for 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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