There's been a notable change in appetite for Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) shares in the week since its second-quarter report, with the stock down 10% to US$6.29. Revenues were a bright spot, with US$14m in revenue arriving 8.5% ahead of expectations, although statutory earnings didn't fare nearly so well, recording a loss of US$0.40, some 6.3% below consensus predictions. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for Recursion Pharmaceuticals from eight analysts is for revenues of US$59.5m in 2024. If met, it would imply a notable 20% increase on its revenue over the past 12 months. Per-share losses are supposed to see a sharp uptick, reaching US$1.55. Before this latest report, the consensus had been expecting revenues of US$58.3m and US$1.62 per share in losses. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for both revenues and losses per share.
The consensus price target fell 9.8%, to US$11.57, suggesting that the analysts remain pessimistic on the company, despite the improved earnings and revenue outlook. 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 Recursion Pharmaceuticals, with the most bullish analyst valuing it at US$17.00 and the most bearish at US$8.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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. We can infer from the latest estimates that forecasts expect a continuation of Recursion Pharmaceuticals'historical trends, as the 44% annualised revenue growth to the end of 2024 is roughly in line with the 52% annual growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 23% per year. So although Recursion Pharmaceuticals is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Recursion Pharmaceuticals' future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Recursion Pharmaceuticals going out to 2026, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 4 warning signs for Recursion Pharmaceuticals (of which 1 doesn't sit too well with us!) you should know about.
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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.