Yahoo Finance What You Need To Know About The Roivant Sciences Ltd. (NASDAQ:ROIV) Analyst Downgrade Today
The analysts covering Roivant Sciences Ltd. (NASDAQ:ROIV) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Shares are up 4.2% to US$11.71 in the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
Following the downgrade, the current consensus from Roivant Sciences' nine analysts is for revenues of US$136m in 2024 which - if met - would reflect a sizeable 73% increase on its sales over the past 12 months. Losses are presumed to reduce, shrinking 11% per share from last year to US$1.25. Yet before this consensus update, the analysts had been forecasting revenues of US$152m and losses of US$1.15 per share in 2024. 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.
View our latest analysis for Roivant Sciences
The consensus price target was broadly unchanged at US$15.88, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Roivant Sciences' growth to accelerate, with the forecast 108% annualised growth to the end of 2024 ranking favourably alongside historical growth of 52% per annum over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Roivant Sciences to grow faster than the wider industry.
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 Roivant Sciences. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Roivant Sciences after today.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Roivant Sciences analysts - going out to 2026, 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.
