Earnings Release: Here's Why Analysts Cut Their Rapid Micro Biosystems, Inc. (NASDAQ:RPID) Price Target To US$17.67

It's been a mediocre week for Rapid Micro Biosystems, Inc. (NASDAQ:RPID) shareholders, with the stock dropping 17% to US$5.77 in the week since its latest full-year results. It was a pretty bad result overall; while revenues were in line with expectations at US$23m, statutory losses exploded to US$3.94 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Rapid Micro Biosystems

Taking into account the latest results, the most recent consensus for Rapid Micro Biosystems from four analysts is for revenues of US$29.5m in 2022 which, if met, would be a sizeable 27% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 31% to US$1.30. Before this earnings announcement, the analysts had been modelling revenues of US$29.7m and losses of US$1.29 per share in 2022.

As a result, it's unexpected to see that the consensus price target fell 23% to US$17.67, with the analysts seemingly becoming more concerned about ongoing losses, despite making no major changes to their forecasts. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Rapid Micro Biosystems analyst has a price target of US$28.00 per share, while the most pessimistic values it at US$10.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Rapid Micro Biosystems' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 27% growth on an annualised basis. This is compared to a historical growth rate of 45% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.8% annually. So it's pretty clear that, while Rapid Micro Biosystems' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Rapid Micro Biosystems' future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Rapid Micro Biosystems going out to 2024, and you can see them free on our platform here.

Even so, be aware that Rapid Micro Biosystems is showing 2 warning signs in our investment analysis , you should know about...

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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.