The analysts covering bluebird bio, Inc. (NASDAQ:BLUE) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the latest downgrade, the 18 analysts covering bluebird bio provided consensus estimates of US$88m revenue in 2021, which would reflect a disturbing 64% decline on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$12.33 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$104m and losses of US$12.19 per share in 2021. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to this year's revenue estimates, while at the same time holding losses per share steady.
The consensus price target was broadly unchanged at US$46.47, implying that the business is performing roughly in line with expectations, despite a downwards adjustment to forecast sales this year. 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. 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. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 74% 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 12% 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
Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that bluebird bio's revenues are expected to grow slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on bluebird bio after today.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple bluebird bio analysts - going out to 2023, 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.
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