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Arbutus Biopharma Corporation (NASDAQ:ABUS) Analysts Are Cutting Their Estimates: Here's What You Need To Know

Simply Wall St
·4 min read

It's shaping up to be a tough period for Arbutus Biopharma Corporation (NASDAQ:ABUS), which a week ago released some disappointing third-quarter results that could have a notable impact on how the market views the stock. It definitely looks like a negative result overall with revenues falling 11% short of analyst estimates at US$1.5m. Statutory losses were US$0.27 per share, 25% bigger than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Arbutus Biopharma

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earnings-and-revenue-growth

Following the latest results, Arbutus Biopharma's four analysts are now forecasting revenues of US$6.72m in 2021. This would be a decent 9.4% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 34% to US$0.80. Before this latest report, the consensus had been expecting revenues of US$10.3m and US$0.78 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 outlook while also expecting losses per share to increase.

There was no major change to the consensus price target of CA$7.88, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Arbutus Biopharma analyst has a price target of CA$8.09 per share, while the most pessimistic values it at CA$4.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Arbutus Biopharma is forecast to grow faster in the future than it has in the past, with revenues expected to grow 9.4%. If achieved, this would be a much better result than the 25% annual decline over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 20% next year. Although Arbutus Biopharma's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$7.88, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Arbutus Biopharma. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Arbutus Biopharma analysts - going out to 2024, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for Arbutus Biopharma that you should be aware of.

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. 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.

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