Oxford Nanopore Technologies plc (LON:ONT) Analysts Are Cutting Their Estimates: Here's What You Need To Know

Shareholders of Oxford Nanopore Technologies plc (LON:ONT) will be pleased this week, given that the stock price is up 11% to UK£1.44 following its latest full-year results. The statutory results were mixed overall, with revenues of UK£170m in line with analyst forecasts, but losses of UK£0.19 per share, some 7.8% larger than the analysts were predicting. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Oxford Nanopore Technologies

After the latest results, the nine analysts covering Oxford Nanopore Technologies are now predicting revenues of UK£192.1m in 2024. If met, this would reflect a notable 13% improvement in revenue compared to the last 12 months. Per-share losses are expected to explode, reaching UK£0.25 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of UK£207.2m and losses of UK£0.15 per share in 2024. While this year's revenue estimates dropped there was also a very substantial increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The average price target fell 14% to UK£2.27, implicitly signalling that lower earnings per share are a leading indicator for Oxford Nanopore Technologies' valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Oxford Nanopore Technologies, with the most bullish analyst valuing it at UK£3.81 and the most bearish at UK£1.15 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Oxford Nanopore Technologies' revenue growth is expected to slow, with the forecast 13% annualised growth rate until the end of 2024 being well below the historical 22% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 20% per year. Factoring in the forecast slowdown in growth, it seems obvious that Oxford Nanopore Technologies is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Oxford Nanopore Technologies. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Oxford Nanopore Technologies analysts - going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Oxford Nanopore Technologies , and understanding them should be part of your investment process.

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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.