Brokers Are Upgrading Their Views On Arbutus Biopharma Corporation (NASDAQ:ABUS) With These New Forecasts

Arbutus Biopharma Corporation (NASDAQ:ABUS) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's 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 stock price has risen 9.5% to US$2.53 over the past week, suggesting investors are becoming more optimistic. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

After the upgrade, the five analysts covering Arbutus Biopharma are now predicting revenues of US$38m in 2022. If met, this would reflect a notable 15% improvement in sales compared to the last 12 months. Losses are forecast to narrow 9.1% to US$0.47 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$32m and losses of US$0.52 per share in 2022. 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.

View our latest analysis for Arbutus Biopharma

Despite these upgrades, the analysts have not made any major changes to their price target of CA$8.08, implying that their latest estimates don't have a long term impact on what they think the stock is worth. 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. Currently, the most bullish analyst values Arbutus Biopharma at CA$9.00 per share, while the most bearish prices it at CA$4.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Arbutus Biopharma's growth to accelerate, with the forecast 33% annualised growth to the end of 2022 ranking favourably alongside historical growth of 23% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Arbutus Biopharma to grow faster than the wider industry.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Arbutus Biopharma's prospects. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, 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 2024, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.