Analyst Forecasts Just Became More Bearish On NanoString Technologies, Inc. (NASDAQ:NSTG)

Simply Wall St
·3 min read

The analysts covering NanoString Technologies, Inc. (NASDAQ:NSTG) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. 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, NanoString Technologies' six analysts are now forecasting revenues of US$175m in 2023. This would be a huge 29% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 32% to US$2.12. However, before this estimates update, the consensus had been expecting revenues of US$209m and US$2.00 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

See our latest analysis for NanoString Technologies

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The consensus price target fell 38% to US$17.00, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values NanoString Technologies at US$31.00 per share, while the most bearish prices it at US$14.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that NanoString Technologies' rate of growth is expected to accelerate meaningfully, with the forecast 23% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 5.6% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.0% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that NanoString Technologies is expected to grow much faster than its industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses next year, suggesting all may not be well at NanoString Technologies. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of NanoString Technologies' future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on NanoString Technologies after today.

There might be good reason for analyst bearishness towards NanoString Technologies, like dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other warning signs we've identified.

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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