Analyst Forecasts Just Became More Bearish On Aadi Bioscience, Inc. (NASDAQ:AADI)

The analysts covering Aadi Bioscience, Inc. (NASDAQ:AADI) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the three analysts covering Aadi Bioscience are now predicting revenues of US$25m in 2024. If met, this would reflect a credible 4.0% improvement in sales compared to the last 12 months. Losses are forecast to narrow 9.9% to US$2.53 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$28m and losses of US$2.49 per share in 2024. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to this year's revenue estimates, while at the same time holding losses per share steady.

Check out our latest analysis for Aadi Bioscience

the analysts have cut their price target 5.7% to US$11.00 per share, signalling that the declining revenue and ongoing losses are contributing to the lower valuation.

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 Aadi Bioscience's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 5.4% growth on an annualised basis. This is compared to a historical growth rate of 36% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 18% per year. Factoring in the forecast slowdown in growth, it seems obvious that Aadi Bioscience is also expected to grow slower than other industry participants.

The Bottom Line

Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Aadi Bioscience's 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 Aadi Bioscience's 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 Aadi Bioscience after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Aadi Bioscience going out to 2026, 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.