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

It's been a mediocre week for Vir Biotechnology, Inc. (NASDAQ:VIR) shareholders, with the stock dropping 17% to US$5.09 in the week since its latest quarterly results. Revenues fell badly short of expectations, with revenue of US$3.0m being some 65% below what the analysts had forecast. Statutory losses were in line with forecasts, with Vir Biotechnology losing US$0.88 a share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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Following the recent earnings report, the consensus from eight analysts covering Vir Biotechnology is for revenues of US$18.9m in 2025. This implies an uneasy 9.4% decline in revenue compared to the last 12 months. Losses are supposed to decline, shrinking 15% from last year to US$3.54. Before this earnings announcement, the analysts had been modelling revenues of US$27.5m and losses of US$3.60 per share in 2025. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to next year's revenue estimates, while at the same time holding losses per share steady.

Check out our latest analysis for Vir Biotechnology

There was no real change to the average price target of US$31.00, suggesting that the revisions to revenue estimates are not expected to have a long-term impact on Vir Biotechnology's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Vir Biotechnology, with the most bullish analyst valuing it at US$110 and the most bearish at US$13.00 per share. 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. 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.

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. One more thing stood out to us about these estimates, and it's the idea that Vir Biotechnology's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 12% to the end of 2025. This tops off a historical decline of 6.5% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 18% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Vir Biotechnology to suffer worse than 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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$31.00, with the latest estimates not enough to have an impact on their price targets.

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 2027, and you can see them free on our platform here.

Even so, be aware that Vir Biotechnology 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.