Broker Revenue Forecasts For Roivant Sciences Ltd. (NASDAQ:ROIV) Are Surging Higher

Shareholders in Roivant Sciences Ltd. (NASDAQ:ROIV) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.

Following the upgrade, the latest consensus from Roivant Sciences' nine analysts is for revenues of US$52m in 2023, which would reflect a satisfactory 2.3% improvement in sales compared to the last 12 months. The loss per share is expected to ameliorate slightly, reducing to US$1.58. However, before this estimates update, the consensus had been expecting revenues of US$31m and US$1.65 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.

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It will come as no surprise to learn that the analysts have increased their price target for Roivant Sciences 9.9% to US$11.13 on the back of these upgrades. 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. Currently, the most bullish analyst values Roivant Sciences at US$19.00 per share, while the most bearish prices it at US$7.00. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Roivant Sciences' revenue growth is expected to slow, with the forecast 4.6% annualised growth rate until the end of 2023 being well below the historical 18% growth over the last year. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 14% annually. Factoring in the forecast slowdown in growth, it seems obvious that Roivant Sciences is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Roivant Sciences' prospects. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Roivant Sciences.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Roivant Sciences going out to 2025, 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 upgrading their estimates. So you may also wish to search this free list of stocks 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.