Analysts Just Shaved Their Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB) Forecasts Dramatically

The latest analyst coverage could presage a bad day for Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the downgrade, the most recent consensus for Y-mAbs Therapeutics from its eight analysts is for revenues of US$52m in 2022 which, if met, would be a sizeable 32% increase on its sales over the past 12 months. Losses are expected to be contained, narrowing 10% from last year to US$2.77. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$60m and losses of US$2.16 per share in 2022. 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.

View our latest analysis for Y-mAbs Therapeutics

The consensus price target was broadly unchanged at US$29.38, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Y-mAbs Therapeutics at US$63.00 per share, while the most bearish prices it at US$15.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Y-mAbs Therapeutics' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 73% growth on an annualised basis. This is compared to a historical growth rate of 95% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 15% annually. So it's pretty clear that, while Y-mAbs Therapeutics' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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 Y-mAbs Therapeutics. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Y-mAbs Therapeutics after the downgrade.

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 Y-mAbs Therapeutics analysts - going out to 2024, and you can see them 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.