Yahoo Finance US$16.33: That's What Analysts Think Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) Is Worth After Its Latest Results
It's been a sad week for Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), who've watched their investment drop 14% to US$7.00 in the week since the company reported its first-quarter result. Revenues fell badly short of expectations, with revenue of US$75m, missing analyst estimates by 29%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Ironwood Pharmaceuticals after the latest results.
View our latest analysis for Ironwood Pharmaceuticals
Taking into account the latest results, Ironwood Pharmaceuticals' six analysts currently expect revenues in 2024 to be US$421.3m, approximately in line with the last 12 months. Ironwood Pharmaceuticals is also expected to turn profitable, with statutory earnings of US$0.78 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$447.8m and earnings per share (EPS) of US$0.75 in 2024. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.
The analysts have cut their price target 9.3% to US$16.33per share, suggesting that the declining revenue was a more crucial indicator than the expected improvement in earnings. 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. Currently, the most bullish analyst values Ironwood Pharmaceuticals at US$23.00 per share, while the most bearish prices it at US$12.00. 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.
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. It's clear from the latest estimates that Ironwood Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with the forecast 2.5% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 1.7% 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 18% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Ironwood Pharmaceuticals is expected to grow slower than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Ironwood Pharmaceuticals following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Ironwood Pharmaceuticals going out to 2026, and you can see them free on our platform here.
Even so, be aware that Ironwood Pharmaceuticals is showing 3 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...
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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.
