Analyst Forecasts Just Became More Bearish On Morphic Holding, Inc. (NASDAQ:MORF)

The analysts covering Morphic Holding, Inc. (NASDAQ:MORF) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the current consensus, from the six analysts covering Morphic Holding, is for revenues of US$13m in 2022, which would reflect a sizeable 33% reduction in Morphic Holding's sales over the past 12 months. Per-share losses are expected to explode, reaching US$3.47 per share. However, before this estimates update, the consensus had been expecting revenues of US$21m and US$3.17 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

Check out our latest analysis for Morphic Holding

The consensus price target fell 9.5% to US$75.80, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. There are some variant perceptions on Morphic Holding, with the most bullish analyst valuing it at US$102 and the most bearish at US$64.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 33% by the end of 2022. This indicates a significant reduction from annual growth of 35% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 13% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Morphic Holding is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower 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 Morphic Holding's future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Morphic Holding after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Morphic Holding's financials, such as dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other warning signs we've identified.

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.

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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.