US$72.50: That's What Analysts Think Veracyte, Inc. (NASDAQ:VCYT) Is Worth After Its Latest Results
There's been a notable change in appetite for Veracyte, Inc. (NASDAQ:VCYT) shares in the week since its quarterly report, with the stock down 16% to US$36.46. Veracyte beat revenue forecasts by a solid 11%, hitting US$37m. Statutory losses also blew out, with the loss per share reaching US$0.66, some 485% bigger than the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Veracyte after the latest results.
See our latest analysis for Veracyte
Taking into account the latest results, the consensus forecast from Veracyte's eight analysts is for revenues of US$195.1m in 2021, which would reflect a huge 59% improvement in sales compared to the last 12 months. Losses are expected to increase substantially, hitting US$1.37 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$194.1m and losses of US$0.31 per share in 2021. While this year's revenue estimates held steady, there was also a sizeable expansion in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 13% to US$72.50, with the analysts signalling that growing losses would be a definite concern. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Veracyte analyst has a price target of US$95.00 per share, while the most pessimistic values it at US$45.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Veracyte's rate of growth is expected to accelerate meaningfully, with the forecast 85% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 17% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Veracyte is expected to grow much faster than its industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Veracyte. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Veracyte's future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Veracyte analysts - going out to 2023, 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 Veracyte 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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