Analysts' Revenue Estimates For MacroGenics, Inc. (NASDAQ:MGNX) Are Surging Higher

Shareholders in MacroGenics, Inc. (NASDAQ:MGNX) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Investors have been pretty optimistic on MacroGenics too, with the stock up 11% to US$4.40 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, MacroGenics' nine analysts are now forecasting revenues of US$132m in 2022. This would be a sizeable 97% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 41% to US$2.10. However, before this estimates update, the consensus had been expecting revenues of US$120m and US$2.27 per share in losses. 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.

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There was no major change to the consensus price target of US$10.94, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. 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. There are some variant perceptions on MacroGenics, with the most bullish analyst valuing it at US$20.00 and the most bearish at US$5.00 per share. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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.

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. One thing stands out from these estimates, which is that MacroGenics is forecast to grow faster in the future than it has in the past, with revenues expected to display 290% annualised growth until the end of 2022. If achieved, this would be a much better result than the 2.2% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 15% per year. Not only are MacroGenics' revenues expected to improve, it seems that the analysts are also expecting it 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 this year, reflecting increased optimism around MacroGenics' prospects. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at MacroGenics.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for MacroGenics going out to 2024, and you can see them free on our platform here..

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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.