One thing we could say about the analysts on Virgin Orbit Holdings, Inc. (NASDAQ:VORB) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

After this downgrade, Virgin Orbit Holdings' three analysts are now forecasting revenues of US$133m in 2023. This would be a huge 302% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$162m of revenue in 2023. The consensus view seems to have become more pessimistic on Virgin Orbit Holdings, noting the substantial drop in revenue estimates in this update.

Check out our latest analysis for Virgin Orbit Holdings

Notably, the analysts have cut their price target 27% to US$5.33, suggesting concerns around Virgin Orbit Holdings' 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 Virgin Orbit Holdings, with the most bullish analyst valuing it at US$9.00 and the most bearish at US$1.00 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Virgin Orbit Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 204% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 70% 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 6.8% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Virgin Orbit Holdings to grow faster than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Virgin Orbit Holdings next year. They're also forecasting more rapid revenue growth than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Virgin Orbit Holdings going forwards.

Hungry for more information? We have estimates for Virgin Orbit Holdings from its three analysts out until 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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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