Shareholders in MacroGenics, Inc. (NASDAQ:MGNX) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. Investors have been pretty optimistic on MacroGenics too, with the stock up 19% to US$5.22 over the past week. Could this upgrade be enough to drive the stock even higher?
Following the upgrade, the latest consensus from MacroGenics' ten analysts is for revenues of US$108m in 2022, which would reflect a huge 62% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 34% to US$2.34. However, before this estimates update, the consensus had been expecting revenues of US$82m and US$3.37 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
The consensus price target fell 15%, to US$13.00, suggesting that the analysts remain pessimistic on the company, despite the improved earnings and revenue outlook. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on MacroGenics, with the most bullish analyst valuing it at US$35.00 and the most bearish at US$4.00 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
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 MacroGenics is forecast to grow faster in the future than it has in the past, with revenues expected to display 162% annualised growth until the end of 2022. If achieved, this would be a much better result than the 2.2% 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 15% per year. Not only are MacroGenics' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting MacroGenics is moving incrementally towards profitability. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. A lower price target is not intuitively what we would expect from a company whose business prospects are improving - at least judging by these forecasts - but if the underlying fundamentals are strong, MacroGenics could be one for the watch list.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for MacroGenics going out to 2024, and you can see them free on our platform here..
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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.
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