Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) Analysts Just Trimmed Their Revenue Forecasts By 50%

The analysts covering Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) 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. At US$22.50, shares are up 5.6% in the past 7 days. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

Following the downgrade, the latest consensus from Agios Pharmaceuticals' eight analysts is for revenues of US$52m in 2024, which would reflect a huge 115% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$5.07 per share. However, before this estimates update, the consensus had been expecting revenues of US$103m and US$5.07 per share in losses. 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.

View our latest analysis for Agios Pharmaceuticals

The consensus price target was broadly unchanged at US$37.50, implying that the business is performing roughly in line with expectations, despite a downwards adjustment to forecast sales next year.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that Agios Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 84% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 53% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 15% per year. So it looks like Agios Pharmaceuticals is expected to grow faster than its competitors, at least for a while.

The Bottom Line

While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Agios Pharmaceuticals going forwards.

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 Agios Pharmaceuticals analysts - going out to 2025, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.