The latest analyst coverage could presage a bad day for Relay Therapeutics, Inc. (NASDAQ:RLAY), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the consensus from Relay Therapeutics' twelve analysts is for revenues of US$3.1m in 2024, which would reflect a disturbing 88% decline in sales compared to the last year of performance. Losses are expected to increase substantially, hitting US$3.05 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$3.7m and losses of US$3.07 per share in 2024. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to next year's revenue estimates, while at the same time holding losses per share steady.

See our latest analysis for Relay Therapeutics

The consensus price target was broadly unchanged at US$22.51, implying that the business is performing roughly in line with expectations, despite a downwards adjustment to forecast sales next year.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Relay Therapeutics' past performance and to peers in the same industry. Over the past five years, revenues have declined around 7.3% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 82% decline in revenue until the end of 2024. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 16% per year. So while a broad number of companies are forecast to grow, unfortunately Relay Therapeutics is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Relay Therapeutics' revenues are expected to grow slower than the wider market. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Relay Therapeutics going forwards.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Relay Therapeutics' financials, such as dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other concerns we've identified.

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