Forecast: Analysts Think Madrigal Pharmaceuticals, Inc.'s (NASDAQ:MDGL) Business Prospects Have Improved Drastically

Madrigal Pharmaceuticals, Inc. (NASDAQ:MDGL) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investors have been pretty optimistic on Madrigal Pharmaceuticals too, with the stock up 52% to US$320 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

After this upgrade, Madrigal Pharmaceuticals' 16 analysts are now forecasting revenues of US$556m in 2025. This would be a substantial improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 42% to US$13.90. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$487m and losses of US$17.41 per share in 2025. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

See our latest analysis for Madrigal Pharmaceuticals

Despite these upgrades, the analysts have not made any major changes to their price target of US$365, implying that their latest estimates don't have a long term impact on what they think the stock is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Madrigal Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with the forecast 4x annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 107% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% annually. 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 here is that analysts reduced their loss per share estimates for next year, reflecting increased optimism around Madrigal Pharmaceuticals' prospects. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to next year's earnings expectations, it might be time to take another look at Madrigal Pharmaceuticals.

Better yet, Madrigal Pharmaceuticals is expected to break-even soon - within the next few years - according to analyst forecasts, which would be a momentous event for shareholders. For more information, you can click through to our free platform to learn more about these forecasts.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.