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bluebird bio, Inc. (NASDAQ:BLUE) Analysts Just Trimmed Their Revenue Forecasts By 15%

·3-min read

The latest analyst coverage could presage a bad day for bluebird bio, Inc. (NASDAQ:BLUE), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the 17 analysts covering bluebird bio are now predicting revenues of US$78m in 2021. If met, this would reflect a major 55% improvement in sales compared to the last 12 months. The loss per share is expected to ameliorate slightly, reducing to US$12.10. However, before this estimates update, the consensus had been expecting revenues of US$91m and US$12.25 per share in losses. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to this year's revenue estimates, while at the same time holding losses per share steady.

Check out our latest analysis for bluebird bio

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The consensus price target fell 45% to US$25.47, with the analysts clearly concerned about the weaker revenue outlook and expectation of ongoing losses. 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. The most optimistic bluebird bio analyst has a price target of US$86.00 per share, while the most pessimistic values it at US$18.00. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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.

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 clear from the latest estimates that bluebird bio's rate of growth is expected to accelerate meaningfully, with the forecast 139% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 53% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.4% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect bluebird bio to grow faster than the wider industry.

The Bottom Line

While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of bluebird bio's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of bluebird bio going forwards.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple bluebird bio analysts - going out to 2023, 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.

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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