Relay Therapeutics, Inc. (NASDAQ:RLAY) Analysts Are Reducing Their Forecasts For This Year

The analysts covering Relay Therapeutics, Inc. (NASDAQ:RLAY) 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) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

After the downgrade, the consensus from Relay Therapeutics' six analysts is for revenues of US$5.7m in 2021, which would reflect a disturbing 93% decline in sales compared to the last year of performance. Losses are predicted to fall substantially, shrinking 20% to US$3.84. However, before this estimates update, the consensus had been expecting revenues of US$9.9m and US$1.86 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Relay Therapeutics

The consensus price target was broadly unchanged at US$54.83, 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. The most optimistic Relay Therapeutics analyst has a price target of US$62.00 per share, while the most pessimistic values it at US$50.00. This is a very narrow spread of estimates, implying either that Relay Therapeutics is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Relay Therapeutics. 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 Relay Therapeutics.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Relay Therapeutics going out to 2023, 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.
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