The Arbutus Biopharma Corporation (NASDAQ:ABUS) Analysts Have Been Trimming Their Sales Forecasts
One thing we could say about the analysts on Arbutus Biopharma Corporation (NASDAQ:ABUS) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the latest downgrade, the five analysts covering Arbutus Biopharma provided consensus estimates of US$4.5m revenue in 2020, which would reflect a sizeable 25% decline on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 59% to US$1.17. Yet before this consensus update, the analysts had been forecasting revenues of US$5.5m and losses of US$1.14 per share in 2020. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
See our latest analysis for Arbutus Biopharma
The consensus price target fell 11% to CA$6.55, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Arbutus Biopharma, with the most bullish analyst valuing it at CA$14.07 and the most bearish at CA$1.32 per share. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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. We would also point out that the forecast 25% revenue decline is roughly in line with the historical trend, which saw revenues shrink -26% annually over the past five years Yet our data suggests that other companies (with analyst coverage) in the industry are expected, in aggregate, to see their revenues rise 16% over the coming year. So it looks like Arbutus Biopharma's revenues are expected to decline at a slower rate than the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Arbutus Biopharma. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Arbutus Biopharma's revenues are expected to grow slower than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on Arbutus Biopharma after today.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Arbutus Biopharma analysts - going out to 2024, 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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