Upgrade: Analysts Just Made A Dazzling Increase To Their Axsome Therapeutics, Inc. (NASDAQ:AXSM) Forecasts

Axsome Therapeutics, Inc. (NASDAQ:AXSM) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. The stock price has risen 7.1% to US$79.01 over the past week, suggesting investors are becoming more optimistic. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

Following the upgrade, the current consensus from Axsome Therapeutics' 13 analysts is for revenues of US$245m in 2023 which - if met - would reflect a sizeable 69% increase on its sales over the past 12 months. Losses are presumed to reduce, shrinking 11% from last year to US$3.23. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$169m and losses of US$4.29 per share in 2023. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

See our latest analysis for Axsome Therapeutics

Despite these upgrades, the analysts have not made any major changes to their price target of US$110, implying that their latest estimates don't have a long term impact on what they think the stock is worth. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Axsome Therapeutics analyst has a price target of US$200 per share, while the most pessimistic values it at US$57.00. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Axsome Therapeutics'historical trends, as the 102% annualised revenue growth to the end of 2023 is roughly in line with the 103% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 7.0% annually. So it's pretty clear that Axsome Therapeutics is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Axsome Therapeutics' prospects. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Axsome Therapeutics could be a good candidate for more research.

That's a pretty serious upgrade, but shareholders might be even more pleased to know that forecasts expect Axsome Therapeutics to be able to reach break-even within the next few years. For more information, you can click through to our free platform to learn more about these forecasts.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading 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.