GeneDx Holdings Corp. (NASDAQ:WGS) just released its quarterly report and things are looking bullish. The results were impressive, with revenues of US$62m exceeding analyst forecasts by 26%, and statutory losses of US$0.78 were likewise much smaller than the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from GeneDx Holdings' four analysts is for revenues of US$242.7m in 2024. This would reflect a solid 9.4% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 44% to US$2.87. Before this latest report, the consensus had been expecting revenues of US$225.8m and US$4.89 per share in losses. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a considerable decrease in loss per share in particular.
The consensus price target rose 34% to US$15.25, with the analysts encouraged by the higher revenue and lower forecast losses for next year. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on GeneDx Holdings, with the most bullish analyst valuing it at US$24.00 and the most bearish at US$5.50 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that GeneDx Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 13% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 2.1% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect GeneDx Holdings to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on GeneDx Holdings. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for GeneDx Holdings going out to 2026, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 3 warning signs for GeneDx Holdings (of which 1 doesn't sit too well with us!) you should know about.
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