Scholar Rock Holding Corporation (NASDAQ:SRRK) Analysts Are More Bearish Than They Used To Be

One thing we could say about the analysts on Scholar Rock Holding Corporation (NASDAQ:SRRK) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the latest consensus from Scholar Rock Holding's three analysts is for revenues of US$32m in 2021, which would reflect a substantial 107% improvement in sales compared to the last 12 months. Per-share losses are expected to see a sharp uptick, reaching US$3.24. However, before this estimates update, the consensus had been expecting revenues of US$30m and US$2.88 per share in losses. So it's pretty clear the analysts have mixed opinions on Scholar Rock Holding even after this update; although they upped their revenue numbers, it came at the cost of a noticeable increase in per-share losses.

View our latest analysis for Scholar Rock Holding

It will come as no surprise that expanding losses caused the consensus price target to fall 7.9% to US$64.00 with the analysts implicitly ranking ongoing losses as a greater concern than growing revenues. 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 Scholar Rock Holding analyst has a price target of US$76.00 per share, while the most pessimistic values it at US$52.00. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. For example, we noticed that Scholar Rock Holding's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 164% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 25% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 14% per year. Not only are Scholar Rock Holding's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider 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 Scholar Rock Holding. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Scholar Rock Holding.

There might be good reason for analyst bearishness towards Scholar Rock Holding, like dilutive stock issuance over the past year. Learn more, and discover the 3 other warning signs we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. 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.
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