Time To Worry? Analysts Just Downgraded Their ChemoCentryx, Inc. (NASDAQ:CCXI) Outlook

The latest analyst coverage could presage a bad day for ChemoCentryx, Inc. (NASDAQ:CCXI), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the latest downgrade, the eight analysts covering ChemoCentryx provided consensus estimates of US$35m revenue in 2021, which would reflect a substantial 49% decline on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$1.99 per share. However, before this estimates update, the consensus had been expecting revenues of US$41m and US$1.98 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 making no real change to the loss per share numbers.

See our latest analysis for ChemoCentryx

the analysts have cut their price target 5.4% to US$32.88 per share, signalling that the declining revenue and ongoing losses are contributing to the lower 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. Currently, the most bullish analyst values ChemoCentryx at US$79.00 per share, while the most bearish prices it at US$17.00. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. 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 20% 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 9.4% per year. It's pretty clear that ChemoCentryx's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of ChemoCentryx's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of ChemoCentryx going forwards.

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 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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