Yahoo Finance These Analysts Just Made An Downgrade To Their Novavax, Inc. (NASDAQ:NVAX) EPS Forecasts
The latest analyst coverage could presage a bad day for Novavax, Inc. (NASDAQ:NVAX), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
Following the downgrade, the current consensus from Novavax's six analysts is for revenues of US$2.4b in 2022 which - if met - would reflect a substantial 84% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 98% to US$0.46. Prior to this update, the analysts had been forecasting revenues of US$4.3b and earnings per share (EPS) of US$24.18 in 2022. So we can see that the consensus has become notably more bearish on Novavax's outlook with these numbers, making a pretty serious reduction to this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.
Check out our latest analysis for Novavax
There was no major change to the consensus price target of US$144, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Novavax at US$207 per share, while the most bearish prices it at US$35.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. As a result it might not be possible to derive much meaning from 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 Novavax's rate of growth is expected to accelerate meaningfully, with the forecast 240% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 74% 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 15% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Novavax to grow faster than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Novavax dropped from profits to a loss this year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Novavax.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Novavax's business, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 1 other concern 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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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.
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