Yahoo Finance Mersana Therapeutics, Inc. (NASDAQ:MRSN) Consensus Forecasts Have Become A Little Darker Since Its Latest Report
Mersana Therapeutics, Inc. (NASDAQ:MRSN) just released its quarterly report and things are looking bullish. Revenues of US$9.2m were better than expected, some 12% ahead of forecasts. The company still lost a statutory US$0.16 per share, although the losses were 14% smaller than the 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for Mersana Therapeutics
Taking into account the latest results, the seven analysts covering Mersana Therapeutics provided consensus estimates of US$35.2m revenue in 2024, which would reflect an uncomfortable 8.2% decline over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 38% to US$0.68. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$39.1m and losses of US$0.66 per share in 2024. Overall it looks as though the analysts are negative in this update. Although revenue forecasts held steady, the consensus also made a moderate increase in to its losses per share forecasts.
The average price target was broadly unchanged at US$6.38, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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. The most optimistic Mersana Therapeutics analyst has a price target of US$9.00 per share, while the most pessimistic values it at US$4.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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 11% annualised decline to the end of 2024. That is a notable change from historical growth of 4.1% 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 18% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Mersana Therapeutics is expected to lag the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Mersana Therapeutics. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Mersana Therapeutics going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Mersana Therapeutics , and understanding these should be part of your investment process.
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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.
