Newsflash: Cytokinetics, Incorporated (NASDAQ:CYTK) Analysts Have Been Trimming Their Revenue Forecasts

Market forces rained on the parade of Cytokinetics, Incorporated (NASDAQ:CYTK) shareholders today, when the analysts downgraded their forecasts for next year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Investors however, have been notably more optimistic about Cytokinetics recently, with the stock price up a remarkable 15% to US$41.41 in the past week. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.

Following the downgrade, the consensus from 13 analysts covering Cytokinetics is for revenues of US$51m in 2023, implying a painful 66% decline in sales compared to the last 12 months. Losses are supposed to balloon 56% to US$4.64 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$57m and losses of US$4.56 per share in 2023. 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 Cytokinetics

the analysts have cut their price target 11% to US$60.43 per share, signalling that the declining revenue and ongoing losses are contributing to the lower valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Cytokinetics analyst has a price target of US$80.00 per share, while the most pessimistic values it at US$29.00. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Cytokinetics' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 58% by the end of 2023. This indicates a significant reduction from annual growth of 37% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 13% annually for the foreseeable future. It's pretty clear that Cytokinetics' 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. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Cytokinetics going forwards.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Cytokinetics' financials, such as dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other risks 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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