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Market forces rained on the parade of Pacific Biosciences of California, Inc. (NASDAQ:PACB) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the current consensus from Pacific Biosciences of California's 13 analysts is for revenues of US$162m in 2025 which - if met - would reflect a modest 5.1% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 28% to US$0.75. However, before this estimates update, the consensus had been expecting revenues of US$187m and US$0.71 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
Check out our latest analysis for Pacific Biosciences of California
The consensus price target fell 12% to US$2.67, 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. We would highlight that Pacific Biosciences of California's revenue growth is expected to slow, with the forecast 5.1% annualised growth rate until the end of 2025 being well below the historical 17% p.a. growth over the last five years. Compare this to the 65 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 6.0% per year. So it's pretty clear that, while Pacific Biosciences of California's revenue growth is expected to slow, it's expected to grow roughly in line with the 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 Pacific Biosciences of California. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Pacific Biosciences of California's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Pacific Biosciences of California going forwards.