Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM) Released Earnings Last Week And Analysts Lifted Their Price Target To US$57.22

Shareholders might have noticed that Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM) filed its annual result this time last week. The early response was not positive, with shares down 3.2% to US$43.71 in the past week. The results overall were pretty much dead in line with analyst forecasts; revenues were US$77m and statutory losses were US$3.20 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Rhythm Pharmaceuticals

Following the latest results, Rhythm Pharmaceuticals' eight analysts are now forecasting revenues of US$134.2m in 2024. This would be a major 73% improvement in revenue compared to the last 12 months. Per-share losses are expected to explode, reaching US$4.41 per share. Before this earnings announcement, the analysts had been modelling revenues of US$131.3m and losses of US$3.87 per share in 2024. While this year's revenue estimates increased, there was also a notable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

It will come as a surprise to learn that the consensus price target rose 6.4% to US$57.22, with the analysts clearly more interested in growing revenue, even as losses intensify. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Rhythm Pharmaceuticals analyst has a price target of US$80.00 per share, while the most pessimistic values it at US$49.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. We can infer from the latest estimates that forecasts expect a continuation of Rhythm Pharmaceuticals'historical trends, as the 73% annualised revenue growth to the end of 2024 is roughly in line with the 86% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 18% per year. So although Rhythm Pharmaceuticals is expected to maintain its revenue growth rate, it's definitely expected 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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Rhythm Pharmaceuticals going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 2 warning signs we've spotted with Rhythm Pharmaceuticals (including 1 which is potentially serious) .

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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.