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Today is shaping up negative for OmniAb, Inc. (NASDAQ:OABI) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the downgrade, the consensus from eight analysts covering OmniAb is for revenues of US$23m in 2025, implying a chunky 13% decline in sales compared to the last 12 months. Losses are expected to increase substantially, hitting US$0.60 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$32m and losses of US$0.59 per share in 2025. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
See our latest analysis for OmniAb
The consensus price target fell 12% to US$8.50, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.
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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 13% by the end of 2025. This indicates a significant reduction from annual growth of 3.2% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - OmniAb is expected to lag the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at OmniAb. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of OmniAb's future valuation. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on OmniAb after today.