Analysts Are Upgrading Aadi Bioscience, Inc. (NASDAQ:AADI) After Its Latest Results

As you might know, Aadi Bioscience, Inc. (NASDAQ:AADI) just kicked off its latest quarterly results with some very strong numbers. It looks like a positive result overall, with revenues of US$4.2m beating forecasts by 9.9%. Statutory losses of US$0.68 per share were 9.9% smaller than the analysts expected, likely helped along by the higher revenues. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Aadi Bioscience

Taking into account the latest results, the consensus forecast from Aadi Bioscience's five analysts is for revenues of US$22.4m in 2023, which would reflect a major 104% improvement in sales compared to the last 12 months. Losses are forecast to narrow 2.3% to US$2.53 per share. Before this latest report, the consensus had been expecting revenues of US$20.4m and US$2.78 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrades to both revenue and loss per share forecasts for next year.

There was no major change to the consensus price target of US$42.50, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Aadi Bioscience at US$48.00 per share, while the most bearish prices it at US$30.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Aadi Bioscience's rate of growth is expected to accelerate meaningfully, with the forecast 77% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 3.0% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Aadi Bioscience to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$42.50, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Aadi Bioscience. Long-term earnings power is much more important than next year's profits. We have forecasts for Aadi Bioscience going out to 2024, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Aadi Bioscience , and understanding them should be part of your investment process.

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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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