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

Zymeworks Inc. (NYSE:ZYME) just released its annual report and things are looking bullish. Revenues of US$27m beat estimates by a substantial 69% margin. Unfortunately, Zymeworks also reported a statutory loss of US$4.11 per share, which at least was smaller than the analysts expected. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Zymeworks

Taking into account the latest results, the seven analysts covering Zymeworks provided consensus estimates of US$16.2m revenue in 2022, which would reflect a substantial 39% decline on its sales over the past 12 months. Per-share losses are predicted to creep up to US$3.79. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$38.0m and losses of US$3.98 per share in 2022. We can see there's definitely been a change in sentiment in this update, with the analysts administering a meaningful downgrade to next year's revenue estimates, while at the same time reducing their loss estimates.

The consensus price target fell 7.4% to US$33.00, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Zymeworks at US$53.00 per share, while the most bearish prices it at US$24.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One more thing stood out to us about these estimates, and it's the idea that Zymeworks' decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 39% to the end of 2022. This tops off a historical decline of 0.1% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 13% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Zymeworks to suffer worse 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. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Zymeworks going out to 2024, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 3 warning signs for Zymeworks 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.