Today is shaping up negative for Vaxart, Inc. (NASDAQ:VXRT) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. The stock price has risen 7.3% to US$5.70 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
Following the downgrade, the latest consensus from Vaxart's three analysts is for revenues of US$33m in 2021, which would reflect a sizeable 332% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$41m in 2021. The consensus view seems to have become more pessimistic on Vaxart, noting the substantial drop in revenue estimates in this update.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Vaxart's growth to accelerate, with the forecast 3x growth ranking favourably alongside historical growth of 17% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 21% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Vaxart is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for next year. Analysts also expect revenues to grow faster than the wider market. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Vaxart going forwards.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Vaxart's financials, such as major dilution from new stock issuance in the past year. For more information, you can click here to discover this and the 1 other risk we've identified.
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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What are the risks and opportunities for Vaxart?
Revenue is forecast to grow 61.41% per year
Has less than 1 year of cash runway
Makes less than USD$1m in revenue ($159K)
Shareholders have been diluted in the past year
Volatile share price over the past 3 months
Currently unprofitable and not forecast to become profitable over the next 3 years
This article by Simply Wall St is general in nature. 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.
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