There's been a notable change in appetite for bluebird bio, Inc. (NASDAQ:BLUE) shares in the week since its annual report, with the stock down 10% to US$80.45. The business exceeded revenue expectations with sales of US$45m coming in 2.9% ahead of forecasts. Statutory losses were US$14.31 a share, in line with what analysts predicted. Following the result, 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 gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.

View our latest analysis for bluebird bio

Following the latest results, bluebird bio's 19 analysts are now forecasting revenues of US$54.5m in 2020. This would be a substantial 22% improvement in sales compared to the last 12 months. Statutory losses are forecast to narrow 9.0% to US$15.59 per share. Before this earnings announcement, analysts had been forecasting revenues of US$56.6m and losses of US$14.77 per share in 2020. Although analysts have lowered their sales forecasts, they've also made a their earnings per share estimates, which implies there's been something of an uptick in sentiment following the latest results.

The average analyst price target was broadly unchanged at US$132, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on bluebird bio, with the most bullish analyst valuing it at US$222 and the most bearish at US$85.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

In addition, we can look to bluebird bio's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. We would highlight that bluebird bio's revenue growth is expected to slow, with forecast 22% increase next year well below the historical 29%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 17% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkbluebird bio will grow faster than the wider market.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses next year, perhaps suggesting bluebird bio is moving incrementally towards profitability. Unfortunately analysts also downgraded their revenue estimates, although industry data suggests that bluebird bio's revenues are expected to grow faster than the wider market. The consensus price target held steady at US$132, with the latest estimates not enough to have an impact on analysts' estimated valuations.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple bluebird bio analysts - going out to 2024, and you can see them free on our platform here.

We also provide an overview of the bluebird bio Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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