What Does The Future Hold For Editas Medicine, Inc. (NASDAQ:EDIT)? These Analysts Have Been Cutting Their Estimates

Market forces rained on the parade of Editas Medicine, Inc. (NASDAQ:EDIT) shareholders today, when the analysts downgraded their forecasts for next year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the consensus from Editas Medicine's nine analysts is for revenues of US$19m in 2021, which would reflect a disturbing 79% decline in sales compared to the last year of performance. Before the latest update, the analysts were foreseeing US$28m of revenue in 2021. The consensus view seems to have become more pessimistic on Editas Medicine, noting the pretty serious reduction to revenue estimates in this update.

Check out our latest analysis for Editas Medicine

There was no particular change to the consensus price target of US$44.38, with Editas Medicine's latest outlook seemingly not enough to result in a change of valuation. 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 Editas Medicine at US$86.00 per share, while the most bearish prices it at US$14.00. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on 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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 79%, a significant reduction from annual growth of 50% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 20% annually for the foreseeable future. It's pretty clear that Editas Medicine's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Editas Medicine next year. They're also anticipating slower revenue growth than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Editas Medicine after today.

Looking to learn more? We have estimates for Editas Medicine from its nine analysts out until 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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