The G1 Therapeutics, Inc. (NASDAQ:GTHX) Analysts Have Been Trimming Their Sales Forecasts

The analysts covering G1 Therapeutics, Inc. (NASDAQ:GTHX) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory 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.

Following the downgrade, the current consensus from G1 Therapeutics' seven analysts is for revenues of US$80m in 2023 which - if met - would reflect a substantial 70% increase on its sales over the past 12 months. Losses are expected to be contained, narrowing 16% from last year to US$3.02. However, before this estimates update, the consensus had been expecting revenues of US$88m and US$2.88 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.

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The consensus price target was broadly unchanged at US$34.00, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the 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. There are some variant perceptions on G1 Therapeutics, with the most bullish analyst valuing it at US$57.00 and the most bearish at US$14.00 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of G1 Therapeutics'historical trends, as the 53% annualised revenue growth to the end of 2023 is roughly in line with the 63% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 15% annually. So although G1 Therapeutics is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider 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 G1 Therapeutics. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of G1 Therapeutics going forwards.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple G1 Therapeutics analysts - going out to 2024, and you can see them free on our platform here.

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