December 3, 2020


Celebrations may be in order for Bicycle Therapeutics plc (NASDAQ:BCYC) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The revenue forecast for next year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.

Following the latest upgrade, the current consensus, from the seven analysts covering Bicycle Therapeutics, is for revenues of US$9.9m in 2021, which would reflect a chunky 16% reduction in Bicycle Therapeutics’ sales over the past 12 months. Before the latest update, the analysts were foreseeing US$8.3m of revenue in 2021. The consensus has definitely become more optimistic, showing a nice gain to revenue forecasts.

earnings-and-revenue-growthNasdaqGS:BCYC Earnings and Revenue Growth November 10th 2020

The consensus price target rose 8.4% to US$27.71, with the analysts clearly more optimistic about Bicycle Therapeutics’ prospects following this update. 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. The most optimistic Bicycle Therapeutics analyst has a price target of US$35.00 per share, while the most pessimistic values it at US$22.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 16%, a significant reduction from annual growth of 31% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 21% next year. It’s pretty clear that Bicycle Therapeutics’ revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The highlight for us was that analysts increased their revenue forecasts for Bicycle Therapeutics next year. They’re also anticipating slower revenue growth than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Bicycle Therapeutics.

Analysts are definitely bullish on Bicycle Therapeutics, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including dilutive stock issuance over the past year. For more information, you can click through to our platform to learn more about this and the 2 other warning signs we’ve identified .

Of course, seeing company management invest large sums of money in a stock can be just