As you might know, Madrigal Pharmaceuticals, Inc. (NASDAQ:MDGL) just kicked off its latest second-quarter results with some very strong numbers. Revenues of US$15m beat estimates by a substantial 234% margin. Unfortunately, Madrigal Pharmaceuticals also reported a statutory loss of US$7.10 per share, which at least was smaller than the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the 15 analysts covering Madrigal Pharmaceuticals are now predicting revenues of US$100.3m in 2024. If met, this would reflect a substantial 585% improvement in revenue compared to the last 12 months. Per-share losses are expected to explode, reaching US$29.04 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$75.0m and losses of US$27.64 per share in 2024. Ergo, there's been a clear change in sentiment, with the analysts lifting this year's revenue estimates, while at the same time increasing their loss per share numbers to reflect the cost of achieving this growth.
The consensus price target stayed unchanged at US$361, seeming to suggest that higher forecast losses are 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. There are some variant perceptions on Madrigal Pharmaceuticals, with the most bullish analyst valuing it at US$511 and the most bearish at US$150 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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. It's clear from the latest estimates that Madrigal Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with the forecast exponential annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 109% 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 23% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Madrigal Pharmaceuticals to grow faster than the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Madrigal Pharmaceuticals. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Madrigal Pharmaceuticals. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Madrigal Pharmaceuticals analysts - going out to 2026, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Madrigal Pharmaceuticals that you should be aware of.
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.