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Orchard Therapeutics plc (NASDAQ:ORTX) Just Released Its Second-Quarter Earnings: Here's What Analysts Think

Simply Wall St ·  {{timeTz}}

It's been a good week for Orchard Therapeutics plc (NASDAQ:ORTX) shareholders, because the company has just released its latest second-quarter results, and the shares gained 8.9% to US$0.58. Revenues of US$4.4m crushed expectations, although expenses also blew out, with the company reporting a statutory loss per share of US$0.40, 55% bigger than analysts expected. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Orchard Therapeutics

earnings-and-revenue-growthNasdaqGS:ORTX Earnings and Revenue Growth August 7th 2022

After the latest results, the six analysts covering Orchard Therapeutics are now predicting revenues of US$17.7m in 2022. If met, this would reflect a huge 53% improvement in sales compared to the last 12 months. Losses are forecast to narrow 8.4% to US$1.22 per share. Before this latest report, the consensus had been expecting revenues of US$16.9m and US$0.96 per share in losses. So it's pretty clear the analysts have mixed opinions on Orchard Therapeutics even after this update; although they upped their revenue numbers, it came at the cost of a sizeable expansion in per-share losses.

The consensus price target stayed unchanged at US$4.20, seeming to suggest that higher forecast losses are not expected to have a long term impact on the valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Orchard Therapeutics, with the most bullish analyst valuing it at US$5.00 and the most bearish at US$1.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. It's clear from the latest estimates that Orchard Therapeutics' rate of growth is expected to accelerate meaningfully, with the forecast 135% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 44% 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 14% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Orchard Therapeutics to grow faster than 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. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at US$4.20, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Orchard Therapeutics. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Orchard Therapeutics analysts - going out to 2024, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Orchard Therapeutics you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

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