These Analysts Think Orchard Therapeutics plc's (NASDAQ:ORTX) Sales Are Under Threat
The latest analyst coverage could presage a bad day for Orchard Therapeutics plc (NASDAQ:ORTX), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
After this downgrade, Orchard Therapeutics' six analysts are now forecasting revenues of US$2.7m in 2020. This would be an okay 5.5% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$2.18 per share. However, before this estimates update, the consensus had been expecting revenues of US$4.1m and US$2.18 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue forecasts while also making no real change to the loss per share numbers.
See our latest analysis for Orchard Therapeutics
There was no real change to the consensus price target of US$25.86, suggesting that the revisions to revenue estimates are not expected to have a long-term impact on Orchard Therapeutics' valuation. 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. The most optimistic Orchard Therapeutics analyst has a price target of US$36.00 per share, while the most pessimistic values it at US$20.00. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Orchard Therapeutics' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Orchard Therapeutics' revenue growth will slow down substantially, with revenues next year expected to grow 5.5%, compared to a historical growth rate of 21% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 15% per year. Factoring in the forecast slowdown in growth, it seems obvious that Orchard Therapeutics is also expected to grow slower than other industry participants.
The Bottom Line
Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Orchard Therapeutics after today.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Orchard Therapeutics' business, like major dilution from new stock issuance in the past year. Learn more, and discover the 3 other concerns we've identified, for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
