Analysts Have Just Cut Their Sage Therapeutics, Inc. (NASDAQ:SAGE) Revenue Estimates By 50%

The analysts covering Sage Therapeutics, Inc. (NASDAQ:SAGE) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the consensus from Sage Therapeutics' 22 analysts is for revenues of US$34m in 2024, which would reflect a sizeable 61% decline in sales compared to the last year of performance. The loss per share is anticipated to greatly reduce in the near future, narrowing 31% to US$6.23. However, before this estimates update, the consensus had been expecting revenues of US$68m and US$6.01 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out our latest analysis for Sage Therapeutics

The consensus price target was broadly unchanged at US$27.05, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.

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. Over the past five years, revenues have declined around 6.5% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 61% decline in revenue until the end of 2024. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 17% annually. So while a broad number of companies are forecast to grow, unfortunately Sage Therapeutics is expected to see its sales affected worse than other companies in the 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 Sage Therapeutics. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Sage Therapeutics after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Sage Therapeutics analysts - going out to 2026, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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