Party Time: Brokers Just Made Major Increases To Their Ikena Oncology, Inc. (NASDAQ:IKNA) Earnings Forecasts

Ikena Oncology, Inc. (NASDAQ:IKNA) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market may be pricing in some blue sky too, with the share price gaining 27% to US$7.23 in the last 7 days. Could this upgrade be enough to drive the stock even higher?

Following the latest upgrade, Ikena Oncology's five analysts currently expect revenues in 2022 to be US$31m, approximately in line with the last 12 months. Per-share losses are expected to explode, reaching US$1.33 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$27m and losses of US$1.93 per share in 2022. 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.

Check out our latest analysis for Ikena Oncology

Despite these upgrades, the analysts have not made any major changes to their price target of US$25.33, implying that their latest estimates don't have a long term impact on what they think the stock is worth. 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. The most optimistic Ikena Oncology analyst has a price target of US$27.00 per share, while the most pessimistic values it at US$24.00. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Ikena Oncology's 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 1.3% by the end of 2022. This indicates a significant reduction from annual growth of 44% 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 4.1% 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 here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Ikena Oncology's prospects. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Ikena Oncology could be a good candidate for more research.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Ikena Oncology analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.