Stock Analysis

Industry Analysts Just Upgraded Their bluebird bio, Inc. (NASDAQ:BLUE) Revenue Forecasts By 2.7%

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bluebird bio, Inc. (NASDAQ:BLUE) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.

Following the latest upgrade, the current consensus, from the 18 analysts covering bluebird bio, is for revenues of US$105m in 2021, which would reflect a stressful 58% reduction in bluebird bio's sales over the past 12 months. Per-share losses are expected to see a sharp uptick, reaching US$11.38. Yet before this consensus update, the analysts had been forecasting revenues of US$103m and losses of US$11.49 per share in 2021. There doesn't appear to have been a major change in analyst sentiment following this consensus update, other than the slight bump in revenue estimates.

Check out our latest analysis for bluebird bio

NasdaqGS:BLUE Earnings and Revenue Growth April 21st 2021

There were no major changes to the US$49.20 consensus price target despite the higher revenue estimates, with the analysts seeming to believe that ongoing losses have a larger impact on the valuation than growing sales. 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 bluebird bio at US$86.00 per share, while the most bearish prices it at US$27.00. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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 would highlight that sales are expected to reverse, with a forecast 58% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 61% over the last five years. 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. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - bluebird bio is expected to lag the wider industry.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting bluebird bio is moving incrementally towards profitability. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at bluebird bio.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple bluebird bio 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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