Time To Worry? Analysts Just Downgraded Their Atara Biotherapeutics, Inc. (NASDAQ:ATRA) Outlook
The latest analyst coverage could presage a bad day for Atara Biotherapeutics, Inc. (NASDAQ:ATRA), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Bidders are definitely seeing a different story, with the stock price of US$2.14 reflecting a 14% rise in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.
Following the latest downgrade, the nine analysts covering Atara Biotherapeutics provided consensus estimates of US$27m revenue in 2023, which would reflect a substantial 53% decline on its sales over the past 12 months. Losses are expected to increase substantially, hitting US$2.51 per share. However, before this estimates update, the consensus had been expecting revenues of US$34m and US$2.42 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
View our latest analysis for Atara Biotherapeutics
The consensus price target was broadly unchanged at US$16.27, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Atara Biotherapeutics analyst has a price target of US$31.00 per share, while the most pessimistic values it at US$2.00. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Atara Biotherapeutics' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 64% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 84% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 16% per year. It's pretty clear that Atara Biotherapeutics' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Atara Biotherapeutics. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Atara Biotherapeutics' revenues are expected to grow slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Atara Biotherapeutics going forwards.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Atara Biotherapeutics going out to 2025, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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