New Forecasts: Here's What Analysts Think The Future Holds For Merus N.V. (NASDAQ:MRUS)

Merus N.V. (NASDAQ:MRUS) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline. The market may be pricing in some blue sky too, with the share price gaining 17% to US$29.40 in the last 7 days. Could this upgrade be enough to drive the stock even higher?

Following the latest upgrade, the eight analysts covering Merus provided consensus estimates of US$29m revenue in 2022, which would reflect a disturbing 33% decline on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$2.76 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$29m and losses of US$2.84 per share in 2022. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers were unchanged.

View our latest analysis for Merus

There's been no major changes to the consensus price target of US$43.14, suggesting that reduced loss estimates are not enough to have a long-term positive impact on the stock's valuation. 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. Currently, the most bullish analyst values Merus at US$45.00 per share, while the most bearish prices it at US$38.00. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Merus' past performance and to peers in the same industry. 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 21% 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 12% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Merus is expected to lag the wider industry.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Merus' prospects. There were no major changes to revenue forecasts, with analysts still expecting the business to grow slower than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Merus.

Analysts are definitely bullish on Merus, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including dilutive stock issuance over the past year. For more information, you can click through to our platform to learn more about this and the 2 other risks we've identified .

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.