Newsflash: I-Mab (NASDAQ:IMAB) Analysts Have Been Trimming Their Revenue Forecasts

Today is shaping up negative for I-Mab (NASDAQ:IMAB) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. 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 most recent consensus for I-Mab from its 15 analysts is for revenues of CN¥603m in 2022 which, if met, would be a substantial increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 49% to CN¥14.35. Yet before this consensus update, the analysts had been forecasting revenues of CN¥728m and losses of CN¥13.75 per share in 2022. 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.

See our latest analysis for I-Mab

The consensus price target fell 21% to US$55.30, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. Currently, the most bullish analyst values I-Mab at US$103 per share, while the most bearish prices it at US$20.00. 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. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the I-Mab's past performance and to peers in the same industry. The analysts are definitely expecting I-Mab's growth to accelerate, with the forecast 6x annualised growth to the end of 2022 ranking favourably alongside historical growth of 93% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that I-Mab is expected to grow much faster than its industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at I-Mab. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better 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 this year's forecasts, we'd be feeling a little more wary of I-Mab going forwards.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple I-Mab analysts - going out to 2024, 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 downgrading their estimates. So you may also wish to search this free list of stocks 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.