What You Need To Know About The Aadi Bioscience, Inc. (NASDAQ:AADI) Analyst Downgrade Today

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 next year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the consensus from Aadi Bioscience's four analysts is for revenues of US$3.4m in 2022, which would reflect a substantial 76% decline in sales compared to the last year of performance. Losses are expected to be contained, narrowing 17% from last year to US$3.45. Yet before this consensus update, the analysts had been forecasting revenues of US$7.4m and losses of US$3.47 per share in 2022. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to next year's revenue estimates, while at the same time holding losses per share steady.

See our latest analysis for Aadi Bioscience

The consensus price target was broadly unchanged at US$50.00, implying that the business is performing roughly in line with expectations, despite a downwards adjustment to forecast sales next year. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Aadi Bioscience at US$51.00 per share, while the most bearish prices it at US$49.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that the analysts have a clear view on its prospects.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Aadi Bioscience's 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 68% by the end of 2022. This indicates a significant reduction from annual growth of 29% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 15% per year. It's pretty clear that Aadi Bioscience's revenues are expected to perform substantially worse than the wider industry.

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. Given the stark change in sentiment, we'd understand if investors became more cautious on Aadi Bioscience after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Aadi Bioscience going out to 2023, 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.

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.

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