What Does The Future Hold For Morphic Holding, Inc. (NASDAQ:MORF)? These Analysts Have Been Cutting Their Estimates

Today is shaping up negative for Morphic Holding, Inc. (NASDAQ:MORF) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the consensus from nine analysts covering Morphic Holding is for revenues of US$12m in 2023, implying a concerning 84% decline in sales compared to the last 12 months. Losses are supposed to balloon 141% to US$3.50 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$14m and losses of US$3.52 per share in 2023. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to next year's revenue estimates, while at the same time holding losses per share steady.

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There was no real change to the consensus price target of US$63.25, suggesting that the revisions to revenue estimates are not expected to have a long-term impact on Morphic Holding's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Morphic Holding analyst has a price target of US$83.00 per share, while the most pessimistic values it at US$44.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 77% by the end of 2023. This indicates a significant reduction from annual growth of 43% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 14% per year. 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

Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Morphic Holding's revenues are expected to grow slower 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 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. Learn more, and discover the 2 other warning signs we've identified, for 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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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.