The Consensus EPS Estimates For MacroGenics, Inc. (NASDAQ:MGNX) Just Fell Dramatically

By
Simply Wall St
Published
May 09, 2022
NasdaqGS:MGNX
Source: Shutterstock

The analysts covering MacroGenics, Inc. (NASDAQ:MGNX) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the current consensus from MacroGenics' ten analysts is for revenues of US$77m in 2022 which - if met - would reflect a satisfactory 7.2% increase on its sales over the past 12 months. The loss per share is expected to ameliorate slightly, reducing to US$3.40. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$111m and losses of US$3.00 per share in 2022. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

See our latest analysis for MacroGenics

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NasdaqGS:MGNX Earnings and Revenue Growth May 9th 2022

The consensus price target was broadly unchanged at US$28.33, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on MacroGenics, with the most bullish analyst valuing it at US$50.00 and the most bearish at US$15.00 per share. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. 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 9.7% annualised growth until the end of 2022. If achieved, this would be a much better result than the 0.7% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 12% annually for the foreseeable future. Although MacroGenics' revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of MacroGenics.

That said, the analysts might have good reason to be negative on MacroGenics, given a short cash runway. For more information, you can click here to discover this and the 3 other warning signs we've identified.

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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