Industry Analysts Just Made A Sizeable Upgrade To Their Epizyme, Inc. (NASDAQ:EPZM) Revenue Forecasts

Shareholders in Epizyme, Inc. (NASDAQ:EPZM) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts have sharply increased their revenue numbers, with a view that Epizyme will make substantially more sales than they'd previously expected.

Following the upgrade, the latest consensus from Epizyme's seven analysts is for revenues of US$56m in 2021, which would reflect a sizeable 153% improvement in sales compared to the last 12 months. Losses are presumed to reduce, shrinking 11% from last year to US$2.21. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$44m and losses of US$2.45 per share in 2021. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

View our latest analysis for Epizyme

The consensus price target rose 17% to US$21.80, with the analysts encouraged by the higher revenue and lower forecast losses for this year. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Epizyme analyst has a price target of US$36.00 per share, while the most pessimistic values it at US$9.00. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Epizyme's growth to accelerate, with the forecast 5x annualised growth to the end of 2021 ranking favourably alongside historical growth of 23% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Epizyme is expected to grow much faster than its 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 Epizyme's prospects. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Epizyme.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Epizyme 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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