The latest analyst coverage could presage a bad day for Editas Medicine, Inc. (NASDAQ:EDIT), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. Surprisingly the share price has been buoyant, rising 40% to US$11.07 in the past 7 days. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.
Following the latest downgrade, the current consensus, from the twelve analysts covering Editas Medicine, is for revenues of US$22m in 2024, which would reflect a sizeable 72% reduction in Editas Medicine's sales over the past 12 months. Per-share losses are expected to explode, reaching US$2.49 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$25m and losses of US$2.41 per share in 2024. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
The consensus price target was broadly unchanged at US$15.07, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Editas Medicine's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 72% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 0.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 18% per year. It's pretty clear that Editas Medicine's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Editas Medicine. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Editas Medicine's revenues are expected to grow slower than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Editas Medicine going forwards.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Editas Medicine going out to 2026, 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.