Time To Worry? Analysts Just Downgraded Their Blueprint Medicines Corporation (NASDAQ:BPMC) Outlook

By
Simply Wall St
Published
February 17, 2022
NasdaqGS:BPMC
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Today is shaping up negative for Blueprint Medicines Corporation (NASDAQ:BPMC) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the most recent consensus for Blueprint Medicines from its twelve analysts is for revenues of US$181m in 2022 which, if met, would be a substantial 69% increase on its sales over the past 12 months. Per-share losses are expected to creep up to US$7.40. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$211m and losses of US$6.95 per share in 2022. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out our latest analysis for Blueprint Medicines

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NasdaqGS:BPMC Earnings and Revenue Growth February 17th 2022

The consensus price target was broadly unchanged at US$113, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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 Blueprint Medicines analyst has a price target of US$152 per share, while the most pessimistic values it at US$84.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for 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 can infer from the latest estimates that forecasts expect a continuation of Blueprint Medicines'historical trends, as the 69% annualised revenue growth to the end of 2022 is roughly in line with the 69% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 14% per year. So although Blueprint Medicines is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Blueprint Medicines. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better 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 Blueprint Medicines 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 Blueprint Medicines analysts - going out to 2024, 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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