Earnings Beat: Madrigal Pharmaceuticals, Inc. (NASDAQ:MDGL) Just Beat Analyst Forecasts, And Analysts Have Been Lifting Their Forecasts

A week ago, Madrigal Pharmaceuticals, Inc. (NASDAQ:MDGL) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. Results clearly exceeded expectations, with a substantial revenue beat leading to smaller losses in what looks like a definite win for investors. Revenues were US$137m and the statutory loss per share was US$3.32, smaller than the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

We've discovered 1 warning sign about Madrigal Pharmaceuticals. View them for free.

Taking into account the latest results, the most recent consensus for Madrigal Pharmaceuticals from 14 analysts is for revenues of US$678.5m in 2025. If met, it would imply a major 114% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 28% to US$12.64. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$589.6m and losses of US$12.40 per share in 2025. So there's been quite a change-up of views after the recent consensus updates, withthe analysts noticeably increasing their revenue forecasts while also expecting losses per share to hold steady.

Check out our latest analysis for Madrigal Pharmaceuticals

There were no major changes to the US$422consensus price target despite the higher revenue estimates, with the analysts seeming to believe that ongoing losses have a larger impact on the valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Madrigal Pharmaceuticals analyst has a price target of US$540 per share, while the most pessimistic values it at US$248. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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. The analysts are definitely expecting Madrigal Pharmaceuticals' growth to accelerate, with the forecast 175% annualised growth to the end of 2025 ranking favourably alongside historical growth of 102% 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 18% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Madrigal Pharmaceuticals to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. The consensus price target held steady at US$422, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Madrigal Pharmaceuticals. Long-term earnings power is much more important than next year's profits. We have forecasts for Madrigal Pharmaceuticals going out to 2027, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Madrigal Pharmaceuticals , and understanding this should be part of your investment process.

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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.