Arvinas, Inc. (NASDAQ:ARVN) Reported Earnings Last Week And Analysts Are Already Upgrading Their Estimates

A week ago, Arvinas, Inc. (NASDAQ:ARVN) came out with a strong set of second-quarter numbers that could potentially lead to a re-rate of the stock. Results overall were credible, with revenues arriving 8.5% better than analyst forecasts at US$77m. Higher revenues also resulted in lower statutory losses, which were US$0.49 per share, some 8.5% smaller than the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Arvinas

Following the latest results, Arvinas' 17 analysts are now forecasting revenues of US$224.4m in 2024. This would be a huge 141% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 32% to US$3.22. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$176.6m and losses of US$3.96 per share in 2024. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

Despite these upgrades,the analysts have not made any major changes to their price target of US$66.59, 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 Arvinas at US$110 per share, while the most bearish prices it at US$38.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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. The analysts are definitely expecting Arvinas' growth to accelerate, with the forecast 5x annualised growth to the end of 2024 ranking favourably alongside historical growth of 32% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Arvinas is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Arvinas analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Arvinas has 2 warning signs we think you should be aware of.

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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.

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