Analysts Are Betting On Cytokinetics, Incorporated (NASDAQ:CYTK) With A Big Upgrade This Week

Cytokinetics, Incorporated (NASDAQ:CYTK) 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. Investor sentiment seems to be improving too, with the share price up 5.5% to US$39.44 over the past 7 days. Could this big upgrade push the stock even higher?

Following the latest upgrade, the 13 analysts covering Cytokinetics provided consensus estimates of US$51m revenue in 2023, which would reflect a sizeable 48% decline on its sales over the past 12 months. The loss per share is expected to ameliorate slightly, reducing to US$4.36. Yet before this consensus update, the analysts had been forecasting revenues of US$46m and losses of US$4.41 per share in 2023. So there's definitely been a change in sentiment in this update, with the analysts upgrading this year's revenue estimates, while at the same time holding losses per share steady.

See our latest analysis for Cytokinetics

There were no major changes to the US$60.38 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. There are some variant perceptions on Cytokinetics, with the most bullish analyst valuing it at US$80.00 and the most bearish at US$41.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 59% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 38% 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 18% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Cytokinetics is expected to lag the wider industry.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Cytokinetics' prospects. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected 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 Cytokinetics.

Analysts are definitely bullish on Cytokinetics, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including dilutive stock issuance over the past year. For more information, you can click through to our platform to learn more about this and the 2 other flags we've identified .

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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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.