23andMe Holding Co. (NASDAQ:ME) Just Reported, And Analysts Assigned A US$5.00 Price Target

August 11, 2022
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Shareholders will be ecstatic, with their stake up 34% over the past week following 23andMe Holding Co.'s (NASDAQ:ME) latest first-quarter results. The results don't look great, especially considering that statutory losses grew 18% toUS$0.20 per share. Revenues of US$64,513,000 did beat expectations by 4.7%, but it looks like a bit of a cold comfort. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for 23andMe Holding

NasdaqGS:ME Earnings and Revenue Growth August 11th 2022

Taking into account the latest results, 23andMe Holding's dual analysts currently expect revenues in 2023 to be US$274.9m, approximately in line with the last 12 months. Losses are forecast to balloon 38% to US$0.81 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$272.9m and losses of US$0.82 per share in 2023.

The analysts trimmed their valuations, with the average price target falling 41% to US$5.00, with the ongoing losses seemingly weighing on sentiment, despite no real changes to the earnings forecasts.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the 23andMe Holding's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 1.1% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 8.6% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.2% annually for the foreseeable future. It's pretty clear that 23andMe Holding's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.

Even so, be aware that 23andMe Holding is showing 3 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

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