It’s been a sad week for Invitae Corporation (NYSE:NVTA), who’ve watched their investment drop 12% to US$23.82 in the week since the company reported its full-year result. The results look positive overall; while revenues of US$217m were in line with analyst predictions, statutory losses were 3.3% smaller than expected, with Invitae losing US$2.66 per share. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether analysts have changed their mind on Invitae after the latest results.
Taking into account the latest results, the most recent consensus for Invitae from seven analysts is for revenues of US$329.7m in 2020, which is a huge 52% increase on its sales over the past 12 months. Losses are expected to be contained, narrowing 15% from last year to US$3.06, on a statutory basis. Yet prior to the latest earnings, analysts had been forecasting revenues of US$329.5m and losses of US$2.48 per share in 2020. So there’s definitely been a decline in analyst sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
Although analysts are now forecasting higher losses, the average analyst price target rose 8.5% to 28.57143, which could indicate that these losses are expected to be “one-off”, or analysts think they won’t have a longer-term impact on the business. 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. The most optimistic Invitae analyst has a price target of US$32.00 per share, while the most pessimistic values it at US$30.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Invitae’s past performance and to peers in the same market. We can infer from the latest estimates that analysts are expecting a continuation of Invitae’s historical trends, as next year’s forecast 52% revenue growth is roughly in line with 61% annual revenue growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 17% next year. So although Invitae is expected to maintain its revenue growth rate, it’s definitely expected to grow faster than the wider market.
The Bottom Line
The most obvious conclusion is that analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
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 Invitae going out to 2024, and you can see them free on our platform here..
If you spot an error that warrants correction, please contact the editor at [email protected]. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
It’s been a sad week for Invitae Corporation (NYSE:NVTA), who’ve watched their investment drop 12% to US$23.82 in the…