Zymeworks Inc. (NASDAQ:ZYME) Consensus Forecasts Have Become A Little Darker Since Its Latest Report

Investors in Zymeworks Inc. (NASDAQ:ZYME) had a good week, as its shares rose 2.7% to close at US$13.28 following the release of its quarterly results. It looks like a moderately negative result overall with revenues falling 10% short of analyst estimates at US$16m. Statutory losses were US$0.39 per share, roughly in line with what the analysts expected. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Zymeworks

Taking into account the latest results, the most recent consensus for Zymeworks from seven analysts is for revenues of US$100.6m in 2025. If met, it would imply a sizeable 62% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 20% to US$1.31. Before this earnings announcement, the analysts had been modelling revenues of US$119.7m and losses of US$0.97 per share in 2025. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

The average price target lifted 9.0% to US$15.15, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer term. 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$28.00 per share, while the most pessimistic values it at US$10.00. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Zymeworks' rate of growth is expected to accelerate meaningfully, with the forecast 47% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 38% p.a. 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 Zymeworks is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Zymeworks. Long-term earnings power is much more important than next year's profits. We have forecasts for Zymeworks 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 2 warning signs for Zymeworks (1 is significant) 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.