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

The analysts might have been a bit too bullish on Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM), given that the company fell short of expectations when it released its quarterly results last week. Revenues missed expectations somewhat, coming in at US$26m and leading to a corresponding blowout in statutory losses. The loss per share was US$2.35, some 17% larger than the analysts forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Rhythm Pharmaceuticals

Taking into account the latest results, the most recent consensus for Rhythm Pharmaceuticals from nine analysts is for revenues of US$123.5m in 2024. If met, it would imply a huge 34% increase on its revenue over the past 12 months. Losses are expected to hold steady at around US$4.41. Before this earnings announcement, the analysts had been modelling revenues of US$131.6m and losses of US$4.17 per share in 2024. So it's pretty clear consensus is more negative on Rhythm Pharmaceuticals after the new consensus numbers; while the analysts trimmed their revenue estimates, they also administered a pronounced increase to per-share loss expectations.

There was no major change to the consensus price target of US$58.00, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Rhythm Pharmaceuticals at US$79.00 per share, while the most bearish prices it at US$46.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Rhythm Pharmaceuticals shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Rhythm Pharmaceuticals' past performance and to peers in the same industry. We would highlight that Rhythm Pharmaceuticals' revenue growth is expected to slow, with the forecast 48% annualised growth rate until the end of 2024 being well below the historical 84% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 18% annually. Even after the forecast slowdown in growth, it seems obvious that Rhythm Pharmaceuticals is also expected 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 Rhythm Pharmaceuticals' revenue estimates, but industry data suggests that it is 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Rhythm Pharmaceuticals going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Rhythm Pharmaceuticals has 1 warning sign we think you should be aware of.

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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.