Stock Analysis

Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) Analysts Just Slashed Next Year's Estimates

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NasdaqGS:AVIR
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The latest analyst coverage could presage a bad day for Atea Pharmaceuticals, Inc. (NASDAQ:AVIR), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the most recent consensus for Atea Pharmaceuticals from its four analysts is for revenues of US$218m in 2022 which, if met, would be an okay 5.0% increase on its sales over the past 12 months. After this downgrade, the company is anticipated to report a loss of US$2.49 in 2022, a sharp decline from a profit over the last year. However, before this estimates update, the consensus had been expecting revenues of US$295m and US$0.78 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Atea Pharmaceuticals

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NasdaqGS:AVIR Earnings and Revenue Growth November 25th 2021

The consensus price target fell 16% to US$16.25, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. Currently, the most bullish analyst values Atea Pharmaceuticals at US$24.00 per share, while the most bearish prices it at US$11.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. We would highlight that Atea Pharmaceuticals' revenue growth is expected to slow, with the forecast 4.0% annualised growth rate until the end of 2022 being well below the historical 130% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.5% annually. So it's pretty clear that, while Atea Pharmaceuticals' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at Atea Pharmaceuticals. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Atea Pharmaceuticals analysts - going out to 2023, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

What are the risks and opportunities for Atea Pharmaceuticals?

Atea Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, focused on discovering, developing, and commercializing antiviral therapeutics for patients suffering from viral infections.

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Rewards

  • Trading at 93.2% below our estimate of its fair value

  • Earnings grew by 44.3% over the past year

Risks

  • Earnings are forecast to decline by an average of 8.3% per year for the next 3 years

  • Significant insider selling over the past 3 months

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