Party Time: Brokers Just Made Major Increases To Their Arbutus Biopharma Corporation (NASDAQ:ABUS) Earnings Forecasts
Arbutus Biopharma Corporation (NASDAQ:ABUS) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. The stock price has risen 8.6% to US$2.53 over the past week, suggesting investors are becoming more optimistic. Could this big upgrade push the stock even higher?
Following the upgrade, the most recent consensus for Arbutus Biopharma from its five analysts is for revenues of US$23m in 2022 which, if met, would be a credible 7.9% increase on its sales over the past 12 months. Losses are forecast to narrow 2.3% to US$0.56 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$20m and losses of US$0.63 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
Check out our latest analysis for Arbutus Biopharma
Despite these upgrades, the analysts have not made any major changes to their price target of CA$8.58, implying that their latest estimates don't have a long term impact on what they think the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Arbutus Biopharma at CA$10.00 per share, while the most bearish prices it at CA$4.00. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Arbutus Biopharma's revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2022 being well below the historical 16% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 12% annually. Factoring in the forecast slowdown in growth, it looks like Arbutus Biopharma is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Arbutus Biopharma is moving incrementally towards profitability. They also upgraded their revenue forecasts, although the latest estimates suggest that Arbutus Biopharma will grow in line with the overall market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Arbutus Biopharma.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 3 potential concerns with Arbutus Biopharma, including major dilution from new stock issuance in the past year. For more information, you can click through to our platform to learn more about this and the 2 other concerns we've identified .
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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
