One thing we could say about the analysts on Vir Biotechnology, Inc. (NASDAQ:VIR) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously. Surprisingly the share price has been buoyant, rising 14% to US$45.15 in the past 7 days. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.
After this downgrade, Vir Biotechnology's six analysts are now forecasting revenues of US$331m in 2021. This would be a substantial 356% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 23% to US$2.42. However, before this estimates update, the consensus had been expecting revenues of US$375m and US$1.96 per share in losses. 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of Vir Biotechnology'shistorical trends, as the 7x annualised revenue growth to the end of 2021 is roughly in line with the 616% annual revenue growth over the past year. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 13% annually. So it's pretty clear that Vir Biotechnology is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on Vir Biotechnology, and their negativity could be grounds for caution.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Vir Biotechnology going out to 2025, and you can see them 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.
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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