For more information, please visit: Wave Life Sciences Ltd. (NASDAQ:WVE) shareholders are likely a little disappointed as shares fell 8.9% to $5.41 in the week following the release of its latest quarterly results. Revenues were in line with expectations at $20 million, while statutory losses widened to $0.25 per share. Following the results release, analysts have updated their earnings model and it would be good to know if they think the company’s outlook has changed a lot or if it’s business as usual. So, we’ve gathered the latest post-earnings forecasts to see what estimates are saying is in store for the next year.
Check out our latest analysis for Wave Life Sciences
Taking into account the latest results, the current consensus from the seven analysts covering Wave Life Sciences is for revenues of US$72.1 million in 2024. This represents a painful 35% decline in Wave Life Sciences’ revenues over the past 12 months. Losses are expected to widen 68% to US$0.99 per share. Before this latest report, the consensus had been expecting revenues of US$62.5 million and a loss of US$0.88 per share. So there has been a clear change in sentiment, with analysts raising their revenue estimates for this year while also increasing their loss per share numbers to reflect the cost of achieving this growth.
The consensus price target remained unchanged at $13.25, suggesting that higher forecast losses are unlikely to have a long-term impact on the valuation. The consensus price target is simply an average of individual analysts’ targets, so it might be helpful to see how wide the range of underlying estimates is. Currently, the most optimistic analyst values Wave Life Sciences at $19.00 per share, while the most pessimistic analyst values it at $5.00. As you can see, the range of estimates is wide. The lowest valuation is less than half of the most optimistic estimate. This suggests that there are widely differing views on how analysts will fare for this company. Therefore, it might not be a good idea to make decisions based on the consensus price target, which is ultimately just an average of this wide range of estimates.
Of course, one can also look at these forecasts in the context of the industry itself. These estimates suggest that revenues are expected to decline, with a 57% annualized decline forecast through the end of 2024. This suggests a significant reduction from the 43% annual growth seen over the past five years. In contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see revenues grow at 9.8% per year for the foreseeable future. It’s pretty clear that Wave Life Sciences’ revenues are expected to perform significantly worse than the wider industry.
The conclusion
Most importantly, the forecast of higher losses next year suggests that all may not be well at Wave Life Sciences. The company also raised its revenue forecast for next year, although the company is expected to grow more slowly than the wider industry. The consensus price target remained stable at $13.25, with recent estimates not enough to have an impact on price targets.
With that in mind, we wouldn’t jump to a conclusion about Wave Life Sciences too quickly. Long-term earnings power is much more important than next year’s earnings. At Simply Wall St, we have a full range of analyst estimates for Wave Life Sciences out to 2026, and you can see them free on our platform here.
However, one should always think about the risks. A typical example: We have 2 warning signs for Wave Life Sciences You should be aware.
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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.
