Vir Biotechnology, Inc. (NASDAQ:VIR) Analysts Just Slashed This Year's Revenue Estimates By 37%

The latest analyst coverage could presage a bad day for Vir Biotechnology, Inc. (NASDAQ:VIR), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the consensus from eight analysts covering Vir Biotechnology is for revenues of US$76m in 2023, implying a stressful 84% decline in sales compared to the last 12 months. Losses are supposed to balloon 142% to US$4.72 per share. However, before this estimates update, the consensus had been expecting revenues of US$121m and US$4.60 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

See our latest analysis for Vir Biotechnology

There was no major change to the consensus price target of US$34.50, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts.

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. We would highlight that sales are expected to reverse, with a forecast 98% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 59% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 17% per year. 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 important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Vir Biotechnology. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Vir Biotechnology's revenues are expected to grow slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Vir Biotechnology after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Vir Biotechnology analysts - going out to 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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