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Merus N.V. Just Reported Earnings, And Analysts Cut Their Target Price

Simply Wall St

Merus N.V. (NASDAQ:MRUS) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues came in 21% better than analyst models expected, at €8.2m, although losses ballooned 30% to €0.35, which is much worse than what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest forecasts to see what analysts are expecting for next year.

See our latest analysis for Merus

NasdaqGM:MRUS Past and Future Earnings, November 15th 2019

Taking into account the latest results, the latest consensus from Merus's six analysts is for revenues of €33.1m in 2020, which would reflect a solid 11% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 60% to €1.86. Before this earnings announcement, analysts had been forecasting revenues of €32.3m and losses of €1.84 per share in 2020. There's been a pretty noticeable increase in sentiment, with analysts upgrading revenues and making a earnings per share in particular

The consensus price target fell 6.2% to US$23.71 as analysts signal that ongoing losses are likely to weigh on the stock price. 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. There are some variant perceptions on Merus, with the most bullish analyst valuing it at US$35.00 and the most bearish at US$16.00 per share. 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.

In addition, we can look to Merus's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. It's pretty clear that analysts expect Merus's revenue growth will slow down substantially, with revenues next year expected to grow 11%, compared to a historical growth rate of 57% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 18% next year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Merus.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Merus going out to 2023, and you can see them free on our platform here..

You can also see our analysis of Merus's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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.

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. Thank you for reading.