Some Analysts Just Cut Their Mirati Therapeutics, Inc. (NASDAQ:MRTX) Estimates

The analysts covering Mirati Therapeutics, Inc. (NASDAQ:MRTX) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

After this downgrade, Mirati Therapeutics' 15 analysts are now forecasting revenues of US$96m in 2023. This would be a huge improvement in sales compared to the last 12 months. Losses are expected to increase slightly, to US$13.21 per share. However, before this estimates update, the consensus had been expecting revenues of US$126m and US$12.81 per share in losses. 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.

Check out our latest analysis for Mirati Therapeutics

The consensus price target fell 21% to US$91.40, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Mirati Therapeutics analyst has a price target of US$188 per share, while the most pessimistic values it at US$61.00. 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. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on 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 Mirati Therapeutics' past performance and to peers in the same industry. The analysts are definitely expecting Mirati Therapeutics' growth to accelerate, with the forecast 4x annualised growth to the end of 2023 ranking favourably alongside historical growth of 57% 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 13% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Mirati Therapeutics to grow faster than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Mirati Therapeutics. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Mirati Therapeutics after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Mirati Therapeutics analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.