Some Analysts Just Cut Their NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) Estimates

Today is shaping up negative for NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. At US$2.25, shares are up 5.1% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

After the downgrade, the consensus from NGM Biopharmaceuticals' six analysts is for revenues of US$8.4m in 2023, which would reflect a concerning 72% decline in sales compared to the last year of performance. Losses are presumed to reduce, shrinking 11% per share from last year to US$1.83. However, before this estimates update, the consensus had been expecting revenues of US$11m and US$1.80 per share in losses. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to this year's revenue estimates, while at the same time holding losses per share steady.

Check out our latest analysis for NGM Biopharmaceuticals

The consensus price target fell 5.6% to US$5.67, with the analysts clearly concerned about the weaker revenue outlook and expectation of ongoing losses.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the NGM Biopharmaceuticals' past performance and to peers in the same industry. One more thing stood out to us about these estimates, and it's the idea that NGM Biopharmaceuticals' decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 92% to the end of 2023. This tops off a historical decline of 15% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 7.4% per year. So while a broad number of companies are forecast to grow, unfortunately NGM Biopharmaceuticals is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that NGM Biopharmaceuticals' revenues are expected to grow slower 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. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on NGM Biopharmaceuticals after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for NGM Biopharmaceuticals going out to 2025, 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.