Analysts Are Betting On Arbutus Biopharma Corporation (NASDAQ:ABUS) With A Big Upgrade This Week

Shareholders in Arbutus Biopharma Corporation (NASDAQ:ABUS) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts have sharply increased their revenue numbers, with a view that Arbutus Biopharma will make substantially more sales than they'd previously expected.

Following the upgrade, the consensus from four analysts covering Arbutus Biopharma is for revenues of US$19m in 2024, implying a chunky 13% decline in sales compared to the last 12 months. Losses are forecast to hold steady at around US$0.45 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$16m and losses of US$0.47 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

Check out our latest analysis for Arbutus Biopharma

Despite these upgrades, the analysts have not made any major changes to their price target of CA$6.32, implying that their latest estimates don't have a long term impact on what they think the stock is worth. 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. The most optimistic Arbutus Biopharma analyst has a price target of CA$8.26 per share, while the most pessimistic values it at CA$5.42. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 10% by the end of 2024. This indicates a significant reduction from annual growth of 41% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 15% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Arbutus Biopharma is expected to lag the wider industry.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for next year, reflecting increased optimism around Arbutus Biopharma's prospects. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Seeing the dramatic upgrade to next year's forecasts, it might be time to take another look at Arbutus Biopharma.

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 Arbutus Biopharma analysts - going out to 2025, and you can see them 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.