Yahoo Finance Analyst Forecasts For Vir Biotechnology, Inc. (NASDAQ:VIR) Are Surging Higher
Vir Biotechnology, Inc. (NASDAQ:VIR) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next 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 market may be pricing in some blue sky too, with the share price gaining 13% to US$25.66 in the last 7 days. Could this upgrade be enough to drive the stock even higher?
After the upgrade, the consensus from Vir Biotechnology's eight analysts is for revenues of US$231m in 2023, which would reflect a disturbing 90% decline in sales compared to the last year of performance. Following this this upgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of US$3.46 per share in 2023. Yet before this consensus update, the analysts had been forecasting revenues of US$215m and losses of US$3.42 per share in 2023. So it looks like there's been no major change in sentiment in this consensus update, although the analysts have made a small increase to revenue forecasts.
Check out our latest analysis for Vir Biotechnology
There were no major changes to the US$47.11 consensus price target despite the higher revenue estimates, with the analysts seeming to believe that ongoing losses have a larger impact on the valuation than growing sales. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Vir Biotechnology, with the most bullish analyst valuing it at US$125 and the most bearish at US$18.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 85% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 94% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 15% annually for the foreseeable future. It's pretty clear that Vir Biotechnology's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses next year, perhaps suggesting Vir Biotechnology is moving incrementally towards profitability. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to next year's earnings expectations, it might be time to take another look at Vir Biotechnology.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Vir Biotechnology analysts - going out to 2024, 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 upgrading their estimates. So you may also wish to search this free list of stocks 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.
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