Shareholders in Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) had a terrible week, as shares crashed 35% to US$4.24 in the week since its latest quarterly results. Revenues missed expectations, with revenue of US$94m falling 12% short of forecasts. Earnings correspondingly dipped, with Ironwood Pharmaceuticals reporting a statutory loss of US$0.01 per share, where the analysts were expecting a profit. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Ironwood Pharmaceuticals

Following the recent earnings report, the consensus from six analysts covering Ironwood Pharmaceuticals is for revenues of US$392.2m in 2024. This implies a perceptible 2.1% decline in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 767% to US$0.50. In the lead-up to this report, the analysts had been modelling revenues of US$410.1m and earnings per share (EPS) of US$0.50 in 2024. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.

It will come as no surprise then, that the consensus price target fell 13% to US$13.83following these changes. 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 Ironwood Pharmaceuticals, with the most bullish analyst valuing it at US$23.00 and the most bearish at US$10.00 per share. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 4.1% by the end of 2024. This indicates a significant reduction from annual growth of 0.6% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 23% per year. It's pretty clear that Ironwood Pharmaceuticals' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. With that said, earnings are more important to the long-term value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Ironwood Pharmaceuticals' future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Ironwood Pharmaceuticals going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 6 warning signs for Ironwood Pharmaceuticals (1 is significant!) that you need to be mindful of.

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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.