The analysts covering VYNE Therapeutics Inc. (NASDAQ:VYNE) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the five analysts covering VYNE Therapeutics are now predicting revenues of US$52m in 2021. If met, this would reflect a huge 210% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$59m in 2021. It looks like forecasts have become a fair bit less optimistic on VYNE Therapeutics, given the substantial drop in revenue estimates.

See our latest analysis for VYNE Therapeutics

Notably, the analysts have cut their price target 7.2% to US$22.00, suggesting concerns around VYNE Therapeutics' valuation. 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 VYNE Therapeutics, with the most bullish analyst valuing it at US$40.00 and the most bearish at US$12.00 per share. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. 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.

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 VYNE Therapeutics' rate of growth is expected to accelerate meaningfully, with the forecast 210% revenue growth noticeably faster than its historical growth of 23% 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 5.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect VYNE Therapeutics to grow faster than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for VYNE Therapeutics next year. The analysts also expect revenues to grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of VYNE Therapeutics' future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on VYNE Therapeutics after today.

Of course, there's always more to the story. At least one of VYNE Therapeutics' five analysts has provided estimates out to 2025, which can be seen for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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