In This Article:
Today is shaping up negative for Zymeworks Inc. (NASDAQ:ZYME) shareholders, with the analysts delivering a substantial negative revision to next year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business. The stock price has risen 6.0% to US$13.70 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
Following the downgrade, the most recent consensus for Zymeworks from its seven analysts is for revenues of US$94m in 2025 which, if met, would be a major 50% increase on its sales over the past 12 months. Losses are presumed to reduce, shrinking 16% per share from last year to US$1.36. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$120m and losses of US$0.97 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.
Check out our latest analysis for Zymeworks
Analysts lifted their price target 6.3% to US$14.78, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Zymeworks'historical trends, as the 38% annualised revenue growth to the end of 2025 is roughly in line with the 44% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 21% per year. So it's pretty clear that Zymeworks is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for next year. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The rising price target is a puzzle, but still - with a serious cut to next year's outlook, we wouldn't be surprised if investors were a bit wary of Zymeworks.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Zymeworks going out to 2026, and you can see them free on our platform here.