Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM) Just Reported And Analysts Have Been Cutting Their Estimates

Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM) just released its latest quarterly report and things are not looking great. It was a pretty negative result overall, with revenues of US$11m missing analyst predictions by 5.4%. Worse, the business reported a statutory loss of US$0.92 per share, much larger than the analysts had forecast prior to the result. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. 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 Rhythm Pharmaceuticals

Following the latest results, Rhythm Pharmaceuticals' eight analysts are now forecasting revenues of US$63.9m in 2023. This would be a substantial 90% improvement in sales compared to the last 12 months. Losses are expected to hold steady at around US$3.23. Before this earnings announcement, the analysts had been modelling revenues of US$67.3m and losses of US$2.96 per share in 2023. Overall it looks as though the analysts are negative in this update. Although sales forecasts held steady, the consensus also made a moderate increase in to its losses per share forecasts.

There was no major change to the consensus price target of US$37.67, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Rhythm Pharmaceuticals, with the most bullish analyst valuing it at US$56.00 and the most bearish at US$23.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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. The analysts are definitely expecting Rhythm Pharmaceuticals' growth to accelerate, with the forecast 135% annualised growth to the end of 2023 ranking favourably alongside historical growth of 93% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 17% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Rhythm Pharmaceuticals to grow faster than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Rhythm Pharmaceuticals. They also downgraded their revenue estimates, although industry data suggests that Rhythm Pharmaceuticals' revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 Rhythm Pharmaceuticals going out to 2025, and you can see them free on our platform here..

Even so, be aware that Rhythm Pharmaceuticals is showing 2 warning signs in our investment analysis , you should know about...

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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.