These Analysts Just Made A Decent Downgrade To Their Roivant Sciences Ltd. (NASDAQ:ROIV) EPS Forecasts

The latest analyst coverage could presage a bad day for Roivant Sciences Ltd. (NASDAQ:ROIV), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

After this downgrade, Roivant Sciences' nine analysts are now forecasting revenues of US$122m in 2024. This would be a meaningful 18% improvement in sales compared to the last 12 months. Losses are expected to increase slightly, to US$1.41 per share. However, before this estimates update, the consensus had been expecting revenues of US$136m and US$1.26 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.

Check out our latest analysis for Roivant Sciences

There was no major change to the consensus price target of US$15.89, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Roivant Sciences' growth to accelerate, with the forecast 39% annualised growth to the end of 2024 ranking favourably alongside historical growth of 26% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Roivant Sciences is expected to grow much faster than its industry.

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 Roivant Sciences. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. 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 Roivant Sciences.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Roivant Sciences analysts - going out to 2026, 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 downgrading 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.