Zymeworks Inc. Just Reported A Surprise Profit And Analysts Updated Their Estimates

Last week, you might have seen that Zymeworks Inc. (NASDAQ:ZYME) released its second-quarter result to the market. The early response was not positive, with shares down 4.4% to US$12.02 in the past week. Revenues of 189% beat expectations by US$49m and was sufficient to generate a statutory profit of US$0.03 - a pleasant surprise given that the analysts were forecasting a loss! Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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After the latest results, the seven analysts covering Zymeworks are now predicting revenues of US$148.9m in 2025. If met, this would reflect a huge 21% improvement in revenue compared to the last 12 months. Per-share losses are predicted to creep up to US$1.03. Before this latest report, the consensus had been expecting revenues of US$108.3m and US$1.53 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

See our latest analysis for Zymeworks

It will come as no surprise to learn thatthe analysts have increased their price target for Zymeworks 5.5% to US$21.56on the back of these upgrades. 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. The most optimistic Zymeworks analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$12.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Zymeworks' past performance and to peers in the same industry. The analysts are definitely expecting Zymeworks' growth to accelerate, with the forecast 47% annualised growth to the end of 2025 ranking favourably alongside historical growth of 22% 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 19% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Zymeworks to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Zymeworks going out to 2027, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 1 warning sign for Zymeworks 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.