Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. The analysts have sharply increased their revenue numbers, with a view that Ironwood Pharmaceuticals will make substantially more sales than they'd previously expected. The market may be pricing in some blue sky too, with the share price gaining 40% to US$2.89 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.

Following the latest upgrade, the current consensus, from the four analysts covering Ironwood Pharmaceuticals, is for revenues of US$308m in 2026, which would reflect a definite 9.2% reduction in Ironwood Pharmaceuticals' sales over the past 12 months. Per-share earnings are expected to leap 162% to US$0.46. Prior to this update, the analysts had been forecasting revenues of US$264m and earnings per share (EPS) of US$0.40 in 2026. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

It will come as no surprise to learn that the analysts have increased their price target for Ironwood Pharmaceuticals 68% to US$1.85 on the back of these upgrades.

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. Over the past five years, revenues have declined around 3.4% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 7.4% decline in revenue until the end of 2026. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 22% per year. So while a broad number of companies are forecast to grow, unfortunately Ironwood Pharmaceuticals is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for next year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Seeing the dramatic upgrade to next year's forecasts, it might be time to take another look at Ironwood Pharmaceuticals.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Ironwood Pharmaceuticals going out to 2027, and you can see them 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 upgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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.