The latest analyst coverage could presage a bad day for Morphic Holding, Inc. (NASDAQ:MORF), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
Following the latest downgrade, the five analysts covering Morphic Holding provided consensus estimates of US$29m revenue in 2021, which would reflect a sizeable 31% decline on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$2.12 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$34m and losses of US$2.11 per share in 2021. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to this year's revenue estimates, while at the same time holding losses per share steady.
See our latest analysis for Morphic Holding
There was no real change to the consensus price target of US$101, suggesting that the revisions to revenue estimates are not expected to have a long-term impact on Morphic Holding's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Morphic Holding analyst has a price target of US$115 per share, while the most pessimistic values it at US$82.00. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 39% by the end of 2021. This indicates a significant reduction from annual growth of 158% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 15% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Morphic Holding is expected to lag the wider industry.
The Bottom Line
Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Morphic Holding after today.