Analyst Forecasts Just Became More Bearish On ChemoCentryx, Inc. (NASDAQ:CCXI)

Today is shaping up negative for ChemoCentryx, Inc. (NASDAQ:CCXI) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. 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 consensus from seven analysts covering ChemoCentryx is for revenues of US$52m in 2021, implying a concerning 27% decline in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$1.43 per share. However, before this estimates update, the consensus had been expecting revenues of US$59m and US$1.34 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

Check out our latest analysis for ChemoCentryx

The consensus price target was broadly unchanged at US$79.43, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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 ChemoCentryx at US$100.00 per share, while the most bearish prices it at US$60.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the ChemoCentryx's past performance and to peers in the same industry. Over the past three years, revenues have declined around 10% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 27% decline in revenue next year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 22% per year. So while a broad number of companies are forecast to grow, unfortunately ChemoCentryx is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at ChemoCentryx. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales 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 ChemoCentryx after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple ChemoCentryx 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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