It's been a pretty great week for Dynavax Technologies Corporation (NASDAQ:DVAX) shareholders, with its shares surging 11% to US$4.15 in the week since its latest third-quarter results. Revenues beat expectations by 42%, and sales of US$13m were sufficient to generate a statutory profit of US$0.04 - a pleasant surprise given that the analysts were forecasting a loss! 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Dynavax Technologies after the latest results.
After the latest results, the four analysts covering Dynavax Technologies are now predicting revenues of US$68.1m in 2021. If met, this would reflect a substantial 96% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 56% to US$0.71. Before this earnings announcement, the analysts had been modelling revenues of US$74.2m and losses of US$0.65 per share in 2021. So it's pretty clear the analysts have mixed opinions on Dynavax Technologies after this update; revenues were downgraded and per-share losses expected to increase.
The average price target was broadly unchanged at US$16.00, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Dynavax Technologies analyst has a price target of US$20.00 per share, while the most pessimistic values it at US$14.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
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. The analysts are definitely expecting Dynavax Technologies' growth to accelerate, with the forecast 96% growth ranking favourably alongside historical growth of 51% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 20% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Dynavax Technologies is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that Dynavax Technologies' revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$16.00, with the latest estimates not enough to have an impact on their price targets.
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 Dynavax Technologies going out to 2024, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for Dynavax Technologies you should know about.
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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