Stock Analysis

Time To Worry? Analysts Just Downgraded Their Bicycle Therapeutics plc (NASDAQ:BCYC) Outlook

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NasdaqGS:BCYC
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One thing we could say about the analysts on Bicycle Therapeutics plc (NASDAQ:BCYC) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the latest consensus from Bicycle Therapeutics' 14 analysts is for revenues of US$17m in 2023, which would reflect a notable 13% improvement in sales compared to the last 12 months. Losses are supposed to balloon 29% to US$4.39 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$19m and losses of US$4.22 per share in 2023. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out the opportunities and risks within the US Biotechs industry.

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NasdaqGS:BCYC Earnings and Revenue Growth November 8th 2022

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. We would highlight that Bicycle Therapeutics' revenue growth is expected to slow, with the forecast 10% annualised growth rate until the end of 2023 being well below the historical 19% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 14% annually. Factoring in the forecast slowdown in growth, it seems obvious that Bicycle Therapeutics is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Bicycle Therapeutics 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 Bicycle Therapeutics analysts - going out to 2024, 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.

What are the risks and opportunities for Bicycle Therapeutics?

Bicycle Therapeutics plc, a clinical-stage biopharmaceutical company, develops a class of medicines for diseases that are underserved by existing therapeutics.

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Rewards

  • Revenue is forecast to grow 61.61% per year

Risks

  • Currently unprofitable and not forecast to become profitable over the next 3 years

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