Rainbows and Unicorns: Arbutus Biopharma Corporation (NASDAQ:ABUS) Analysts Just Became A Lot More Optimistic

Arbutus Biopharma Corporation (NASDAQ:ABUS) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.

After the upgrade, the five analysts covering Arbutus Biopharma are now predicting revenues of US$32m in 2022. If met, this would reflect a substantial 49% improvement in sales compared to the last 12 months. The loss per share is expected to ameliorate slightly, reducing to US$0.52. However, before this estimates update, the consensus had been expecting revenues of US$20m and US$0.63 per share in losses. 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.

See our latest analysis for Arbutus Biopharma

There was no major change to the consensus price target of CA$8.61, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Arbutus Biopharma at CA$9.98 per share, while the most bearish prices it at CA$3.99. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Arbutus Biopharma's rate of growth is expected to accelerate meaningfully, with the forecast 71% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 16% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% 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. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Arbutus Biopharma could be a good candidate for more research.

Analysts are clearly in love with Arbutus Biopharma at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as major dilution from new stock issuance in the past year. For more information, you can click through to our platform to learn more about this and the 2 other concerns we've identified .

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.