Recursion Pharmaceuticals, Inc. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

By
Simply Wall St
Published
May 14, 2022
NasdaqGS:RXRX
Source: Shutterstock

Last week, you might have seen that Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) released its quarterly result to the market. The early response was not positive, with shares down 6.9% to US$5.64 in the past week. It was a pretty bad result overall, with revenues coming in 94% lower than the analysts predicted. Statutory earnings correspondingly nosedived, with Recursion Pharmaceuticals reporting a loss of US$0.33 per share, where the analysts were expecting a profit. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Recursion Pharmaceuticals

earnings-and-revenue-growth
NasdaqGS:RXRX Earnings and Revenue Growth May 13th 2022

Taking into account the latest results, the current consensus from Recursion Pharmaceuticals' five analysts is for revenues of US$43.7m in 2022, which would reflect a sizeable 238% increase on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$1.60 per share. Before this earnings announcement, the analysts had been modelling revenues of US$103.8m and losses of US$1.46 per share in 2022. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The consensus price target fell 16% to US$16.20, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Recursion Pharmaceuticals analyst has a price target of US$36.00 per share, while the most pessimistic values it at US$9.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Recursion Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with the forecast 4x annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 100% over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Recursion Pharmaceuticals to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that Recursion Pharmaceuticals' revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Recursion Pharmaceuticals' future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Recursion Pharmaceuticals going out to 2024, and you can see them free on our platform here..

Before you take the next step you should know about the 4 warning signs for Recursion Pharmaceuticals (1 doesn't sit too well with us!) that we have uncovered.

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