Analysts Just Slashed Their Ikena Oncology, Inc. (NASDAQ:IKNA) EPS Numbers

Today is shaping up negative for Ikena Oncology, Inc. (NASDAQ:IKNA) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the five analysts covering Ikena Oncology, is for revenues of US$18m in 2023, which would reflect a noticeable 4.5% reduction in Ikena Oncology's sales over the past 12 months. Per-share losses are expected to explode, reaching US$1.65 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$29m and losses of US$1.50 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 expecting losses per share to increase.

View our latest analysis for Ikena Oncology

There was no major change to the consensus price target of US$17.33, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 8.8% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 26% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Ikena Oncology is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Ikena Oncology's revenues are expected to grow slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Ikena Oncology after the downgrade.

That said, the analysts might have good reason to be negative on Ikena Oncology, given dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other concerns we've identified.

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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.