Need To Know: Analysts Just Made A Substantial Cut To Their Mirum Pharmaceuticals, Inc. (NASDAQ:MIRM) Estimates

One thing we could say about the analysts on Mirum Pharmaceuticals, Inc. (NASDAQ:MIRM) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. 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 most recent consensus for Mirum Pharmaceuticals from its six analysts is for revenues of US$46m in 2022 which, if met, would be a huge 185% increase on its sales over the past 12 months. Losses are expected to be contained, narrowing 12% from last year to US$5.14. Yet before this consensus update, the analysts had been forecasting revenues of US$75m and losses of US$3.87 per share in 2022. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Mirum Pharmaceuticals

The consensus price target was broadly unchanged at US$54.71, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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. The most optimistic Mirum Pharmaceuticals analyst has a price target of US$77.00 per share, while the most pessimistic values it at US$30.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Mirum Pharmaceuticals' past performance and to peers in the same industry. We would highlight that Mirum Pharmaceuticals' revenue growth is expected to slow, with the forecast 131% annualised growth rate until the end of 2022 being well below the historical 165% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 16% per year. Even after the forecast slowdown in growth, it seems obvious that Mirum Pharmaceuticals is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Mirum Pharmaceuticals after the downgrade.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Mirum Pharmaceuticals analysts - going out to 2023, 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.

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.

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