Wave Life Sciences Ltd. (NASDAQ:WVE) shareholders are probably feeling a little disappointed, since its shares fell 8.5% to US$5.62 in the week after its latest first-quarter results. Revenues fell badly short of expectations, with revenue of US$13m, missing analyst estimates by 50%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Wave Life Sciences

Taking into account the latest results, the current consensus, from the six analysts covering Wave Life Sciences, is for revenues of US$87.0m in 2024. This implies a painful 23% reduction in Wave Life Sciences' revenue over the past 12 months. Losses are forecast to balloon 75% to US$0.88 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$76.4m and losses of US$1.01 per share in 2024. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

The consensus price target rose 43% to US$13.17, 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. Currently, the most bullish analyst values Wave Life Sciences at US$19.00 per share, while the most bearish prices it at US$5.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. 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.

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. We would highlight that revenue is expected to reverse, with a forecast 29% annualised decline to the end of 2024. That is a notable change from historical growth of 40% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Wave Life Sciences is expected to lag 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. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to perform worse 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Wave Life Sciences going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 4 warning signs for Wave Life Sciences (1 is a bit concerning!) that you should be aware of.

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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.