Earnings Update: OmniAb, Inc. (NASDAQ:OABI) Just Reported And Analysts Are Trimming Their Forecasts

The analysts might have been a bit too bullish on OmniAb, Inc. (NASDAQ:OABI), given that the company fell short of expectations when it released its quarterly results last week. Statutory earnings fell substantially short of expectations, with revenues of US$6.9m missing forecasts by 42%. Losses exploded, with a per-share loss of US$0.15 some 36% below prior forecasts. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on OmniAb after the latest results.

Check out our latest analysis for OmniAb

After the latest results, the consensus from OmniAb's six analysts is for revenues of US$49.9m in 2023, which would reflect a sizeable 25% decline in revenue compared to the last year of performance. Losses are forecast to balloon 99% to US$0.46 per share. Before this latest report, the consensus had been expecting revenues of US$57.8m and US$0.36 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

There was no major change to the consensus price target of US$10.00, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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 OmniAb analyst has a price target of US$11.00 per share, while the most pessimistic values it at US$8.00. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 43% by the end of 2023. This indicates a significant reduction from annual growth of 72% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.4% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - OmniAb is expected to lag the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at OmniAb. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$10.00, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on OmniAb. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple OmniAb analysts - going out to 2025, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for OmniAb that you need to be mindful of.

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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.