It’s been a good week for Arvinas, Inc. (NASDAQ:ARVN) shareholders, because the company has just released its latest third-quarter results, and the shares gained 5.0% to US$21.96. Revenues came in 45% better than analyst models expected, at US$7.6m, although statutory losses were 17% larger than expected, at US$0.79 per share. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, Arvinas’ eight analysts currently expect revenues in 2021 to be US$24.0m, approximately in line with the last 12 months. Per-share losses are supposed to see a sharp uptick, reaching US$3.06. Before this earnings announcement, the analysts had been modelling revenues of US$22.5m and losses of US$2.90 per share in 2021. So it’s pretty clear consensus is mixed on Arvinas after the new consensus numbers; while the analysts lifted revenue numbers, they also administered a per-share loss expectations.
There was no major change to the consensus price target of US$61.30, with growing revenues seemingly enough to offset the concern of growing losses. 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 Arvinas analyst has a price target of US$78.00 per share, while the most pessimistic values it at US$45.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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 revenue decline of 1.8%, a significant reduction from annual growth of 57% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.7% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – Arvinas is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. The consensus price target held steady at US$61.30, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have estimates – from multiple Arvinas analysts – going out to 2024, and you can see them free on our platform here.
And what about risks? Every company has them, and we’ve spotted 4 warning signs for Arvinas (of which 1 is significant!) you should know about.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.