The analysts covering Blueprint Medicines Corporation (NASDAQ:BPMC) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.
After this downgrade, Blueprint Medicines' 13 analysts are now forecasting revenues of US$380m in 2020. This would be a huge 405% improvement in sales compared to the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of US$1.78 per share this year. Yet before this consensus update, the analysts had been forecasting revenues of US$248m and losses of US$3.90 per share in 2020. It looks like there's been a definite improvement in business conditions, with a revenue upgrade supposed to lead to profitability sooner than previously forecast.
See our latest analysis for Blueprint Medicines
Despite these upgrades, the analysts have not made any major changes to their price target of US$96.40, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Blueprint Medicines, with the most bullish analyst valuing it at US$110 and the most bearish at US$76.00 per share. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Blueprint Medicines' past performance and to peers in the same industry. The analysts are definitely expecting Blueprint Medicines' growth to accelerate, with the forecast 4x growth ranking favourably alongside historical growth of 32% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 24% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Blueprint Medicines is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away from this upgrade is that there is now an expectation for Blueprint Medicines to become profitable this year, compared to previous expectations of a loss. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Blueprint Medicines after the downgrade.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Blueprint Medicines analysts - going out to 2024, 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. 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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