Shareholders in Moderna, Inc. (NASDAQ:MRNA) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts have sharply increased their revenue numbers, with a view that Moderna will make substantially more sales than they'd previously expected. Investors have been pretty optimistic on Moderna too, with the stock up 23% to US$109 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
After the upgrade, the 16 analysts covering Moderna are now predicting revenues of US$6.0b in 2021. If met, this would reflect a substantial improvement in sales compared to the last 12 months. Losses are expected to turn into profits real soon, with the analysts forecasting US$4.17 in per-share earnings. Before this latest update, the analysts had been forecasting revenues of US$5.5b and earnings per share (EPS) of US$3.92 in 2021. The forecasts seem more optimistic now, with a solid increase in revenue and a modest lift to earnings per share estimates.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 5.2% to US$108 per share. 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. The most optimistic Moderna analyst has a price target of US$166 per share, while the most pessimistic values it at US$60.00. 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. For example, we noticed that Moderna's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow many times over, well above its historical decline of 22% a year over the past three years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 21% next year. Not only are Moderna's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for next year, expecting improving business conditions. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Moderna.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Moderna going out to 2024, and you can see them free on our platform here..
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