Stock Analysis

Need To Know: Analysts Are Much More Bullish On 23andMe Holding Co. (NASDAQ:ME) Revenues

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Celebrations may be in order for 23andMe Holding Co. (NASDAQ:ME) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The revenue forecast for next year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.

After this upgrade, 23andMe Holding's dual analysts are now forecasting revenues of US$345m in 2023. This would be a huge 33% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$313m in 2023. It looks like there's been a clear increase in optimism around 23andMe Holding, given the decent improvement in revenue forecasts.

See our latest analysis for 23andMe Holding

NasdaqGS:ME Earnings and Revenue Growth February 18th 2022

The consensus price target fell 26% to US$8.50, with the analysts clearly less optimistic about 23andMe Holding's valuation following this update. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic 23andMe Holding analyst has a price target of US$11.00 per share, while the most pessimistic values it at US$6.00. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. One thing stands out from these estimates, which is that 23andMe Holding is forecast to grow faster in the future than it has in the past, with revenues expected to display 25% annualised growth until the end of 2023. If achieved, this would be a much better result than the 22% annual decline over the past three years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 8.2% annually. So it looks like 23andMe Holding is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The highlight for us was that analysts increased their revenue forecasts for 23andMe Holding next year. They're also forecasting more rapid revenue growth than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of 23andMe Holding's future valuation. Seeing the dramatic upgrade to next year's forecasts, it might be time to take another look at 23andMe Holding.

Looking for more information? We have analyst estimates for 23andMe Holding going out to 2024, and you can see them free on our platform here.

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