Analyst Forecasts Just Became More Bearish On GeneDx Holdings Corp. (NASDAQ:WGS)

The latest analyst coverage could presage a bad day for GeneDx Holdings Corp. (NASDAQ:WGS), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the latest consensus from GeneDx Holdings' three analysts is for revenues of US$222m in 2024, which would reflect a credible 7.6% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 80% to US$3.59. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$248m and losses of US$3.53 per share in 2024. 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 making no real change to the loss per share numbers.

See our latest analysis for GeneDx Holdings

The consensus price target fell 27% to US$7.25, with the analysts clearly concerned about the weaker revenue outlook and expectation of ongoing losses.

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 GeneDx Holdings' revenue growth is expected to slow, with the forecast 6.1% annualised growth rate until the end of 2024 being well below the historical 7.7% p.a. growth over the last five years. Compare this to the 198 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 7.0% per year. Factoring in the forecast slowdown in growth, it looks like GeneDx Holdings is forecast to grow at about the same rate as the wider industry.

The Bottom Line

Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on GeneDx Holdings after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with GeneDx Holdings' financials, such as a short cash runway. Learn more, and discover the 3 other risks we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.