News Flash: One Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) Analyst Has Been Trimming Their Revenue Forecasts

One thing we could say about the covering analyst on Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the consensus from one analyst covering Vanda Pharmaceuticals is for revenues of US$149m in 2024, implying a sizeable 30% decline in sales compared to the last 12 months. After this downgrade, the company is anticipated to report a loss of US$0.46 in 2024, a sharp decline from a profit over the last year. Yet prior to the latest estimates, the analyst had been forecasting revenues of US$179m and losses of US$0.17 per share in 2024. Ergo, there's been a clear change in sentiment, with the analyst administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out our latest analysis for Vanda Pharmaceuticals

The consensus price target fell 21% to US$4.25, implicitly signalling that lower earnings per share are a leading indicator for Vanda Pharmaceuticals' valuation.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 25% by the end of 2024. This indicates a significant reduction from annual growth of 4.7% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 15% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Vanda Pharmaceuticals is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analyst increased their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The consensus price target fell measurably, with the analyst seemingly not reassured by recent business developments, leading to a lower estimate of Vanda Pharmaceuticals' future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Vanda Pharmaceuticals after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Vanda Pharmaceuticals going out as far as 2025, 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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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.