Analysts Just Made A Substantial Upgrade To Their Axsome Therapeutics, Inc. (NASDAQ:AXSM) Forecasts

Axsome Therapeutics, Inc. (NASDAQ:AXSM) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. The stock price has risen 7.1% to US$79.01 over the past week, suggesting investors are becoming more optimistic. Could this big upgrade push the stock even higher?

After this upgrade, Axsome Therapeutics' 13 analysts are now forecasting revenues of US$245m in 2023. This would be a huge 69% improvement in sales compared to the last 12 months. Losses are expected to be contained, narrowing 11% from last year to US$3.23. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$169m and losses of US$4.29 per share in 2023. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

View our latest analysis for Axsome Therapeutics

There was no major change to the consensus price target of US$110, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Axsome Therapeutics at US$200 per share, while the most bearish prices it at US$57.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Axsome Therapeutics' past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Axsome Therapeutics'historical trends, as the 102% annualised revenue growth to the end of 2023 is roughly in line with the 103% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 7.0% annually. So it's pretty clear that Axsome Therapeutics is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Axsome Therapeutics' prospects. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Axsome Therapeutics.

Better yet, Axsome Therapeutics is expected to break-even soon - within the next few years - according to analyst forecasts, which would be a momentous event for shareholders. You can learn more about these forecasts, for 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.

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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.

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