Celebrations may be in order for Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.
Following the upgrade, the most recent consensus for Rigel Pharmaceuticals from its five analysts is for revenues of US$135m in 2021 which, if met, would be a sizeable 28% increase on its sales over the past 12 months. Losses are forecast to narrow 8.8% to US$0.15 per share. However, before this estimates update, the consensus had been expecting revenues of US$100m and US$0.31 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.
The consensus price target rose 16% to US$8.50, with the analysts encouraged by the higher revenue and lower forecast losses for next year. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Rigel Pharmaceuticals at US$11.00 per share, while the most bearish prices it at US$7.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Rigel Pharmaceuticals shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Rigel Pharmaceuticals' revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 22% growth on an annualised basis. This is compared to a historical growth rate of 39% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 21% annually. So it's pretty clear that, while Rigel Pharmaceuticals' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing here is that analysts reduced their loss per share estimates for next year, reflecting increased optimism around Rigel Pharmaceuticals' prospects. They also upgraded their revenue forecasts, although the latest estimates suggest that Rigel Pharmaceuticals will grow in line with the overall market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Rigel Pharmaceuticals.
Better yet, Rigel Pharmaceuticals is expected to break-even soon - within the next few years - according to analyst forecasts, which would be a momentous event for shareholders. You can learn more about these forecasts, for 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 upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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