Earnings Update: Vir Biotechnology, Inc. (NASDAQ:VIR) Just Reported And Analysts Are Boosting Their Estimates

Vir Biotechnology, Inc. (NASDAQ:VIR) just released its quarterly report and things are looking bullish. The results were impressive, with revenues of US$56m exceeding analyst forecasts by 381%, and statutory losses of US$0.48 were likewise much smaller than the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Vir Biotechnology

Taking into account the latest results, the current consensus, from the seven analysts covering Vir Biotechnology, is for revenues of US$68.8m in 2024. This implies a chunky 14% reduction in Vir Biotechnology's revenue over the past 12 months. The loss per share is expected to ameliorate slightly, reducing to US$3.70. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$40.6m and losses of US$4.20 per share in 2024. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

Despite these upgrades,the analysts have not made any major changes to their price target of US$29.75, implying that their latest estimates don't have a long term impact on what they think the stock is worth. 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. The most optimistic Vir Biotechnology analyst has a price target of US$110 per share, while the most pessimistic values it at US$12.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 18% annualised decline to the end of 2024. That is a notable change from historical growth of 35% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 18% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Vir Biotechnology is expected to lag the wider 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 upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Vir Biotechnology going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Vir Biotechnology (1 is concerning) 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.