Stock Analysis

TG Therapeutics, Inc. (NASDAQ:TGTX) Analysts Just Slashed Next Year's Revenue Estimates By 12%

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Market forces rained on the parade of TG Therapeutics, Inc. (NASDAQ:TGTX) shareholders today, when the analysts downgraded their forecasts for next year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. Surprisingly the share price has been buoyant, rising 48% to US$42.27 in the past 7 days. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the downgrade, the most recent consensus for TG Therapeutics from its five analysts is for revenues of US$54m in 2021 which, if met, would be a substantial increase on its sales over the past 12 months. Losses are expected to be contained, narrowing 12% from last year to US$1.88. However, before this estimates update, the consensus had been expecting revenues of US$61m and US$1.82 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

Check out our latest analysis for TG Therapeutics

NasdaqCM:TGTX Earnings and Revenue Growth December 14th 2020

The consensus price target lifted 20% to US$56.86, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer term. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on TG Therapeutics, with the most bullish analyst valuing it at US$70.00 and the most bearish at US$38.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. One thing stands out from these estimates, which is that TG Therapeutics is forecast to grow faster in the future than it has in the past, with revenues expected to grow many times over. If achieved, this would be a much better result than the 0.06% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 21% per year. So it looks like TG Therapeutics is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of TG Therapeutics going forwards.

That said, the analysts might have good reason to be negative on TG Therapeutics, given recent substantial insider selling. For more information, you can click here to discover this and the 4 other flags we've identified.

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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