Avidity Biosciences, Inc. (NASDAQ:RNA) Released Earnings Last Week And Analysts Lifted Their Price Target To US$66.67

Investors in Avidity Biosciences, Inc. (NASDAQ:RNA) had a good week, as its shares rose 2.7% to close at US$44.99 following the release of its quarterly results. Statutory losses were much smaller than expected, at just US$0.65 per share, even though revenues of US$2.0m missed analyst expectations by a remarkable 32%. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Avidity Biosciences

After the latest results, the seven analysts covering Avidity Biosciences are now predicting revenues of US$13.3m in 2024. If met, this would reflect a substantial 26% improvement in revenue compared to the last 12 months. Per-share losses are expected to explode, reaching US$2.90 per share. Before this latest report, the consensus had been expecting revenues of US$14.7m and US$3.22 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.

The consensus price target rose 8.3% to US$66.67, with the analysts increasingly optimistic about shrinking losses, despite the expected decline in revenue. 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 Avidity Biosciences analyst has a price target of US$96.00 per share, while the most pessimistic values it at US$45.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Avidity Biosciences' past performance and to peers in the same industry. The analysts are definitely expecting Avidity Biosciences' growth to accelerate, with the forecast 58% annualised growth to the end of 2024 ranking favourably alongside historical growth of 6.0% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 23% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Avidity Biosciences is expected to grow much faster than its industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. They also downgraded Avidity Biosciences' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Yet - earnings are more important to the intrinsic value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Avidity Biosciences analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Avidity Biosciences has 4 warning signs we think you should be aware 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.