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Arbutus Biopharma Corporation (NASDAQ:ABUS) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investor sentiment seems to be improving too, with the share price up 7.0% to US$2.46 over the past 7 days. Could this big upgrade push the stock even higher?
Following the upgrade, the current consensus from Arbutus Biopharma's five analysts is for revenues of US$45m in 2022 which - if met - would reflect a sizeable 34% increase on its sales over the past 12 months. Losses are presumed to reduce, shrinking 11% from last year to US$0.45. Yet before this consensus update, the analysts had been forecasting revenues of US$32m and losses of US$0.52 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
Check out our latest analysis for Arbutus Biopharma
Despite these upgrades, the analysts have not made any major changes to their price target of CA$8.11, implying that their latest estimates don't have a long term impact on what they think the stock is worth. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Arbutus Biopharma, with the most bullish analyst valuing it at CA$8.94 and the most bearish at CA$3.97 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Arbutus Biopharma's growth to accelerate, with the forecast 79% annualised growth to the end of 2022 ranking favourably alongside historical growth of 23% per annum 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. Factoring in the forecast acceleration in revenue, it's pretty clear that Arbutus Biopharma is expected to grow much faster than its industry.