Wave Life Sciences Ltd. (NASDAQ:WVE) shareholders are probably feeling a little disappointed, since its shares fell 8.9% to US$5.41 in the week after its latest quarterly results. Revenues were in line with expectations, at US$20m, while statutory losses ballooned to US$0.25 per share. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Wave Life Sciences

Taking into account the latest results, the current consensus, from the seven analysts covering Wave Life Sciences, is for revenues of US$72.1m in 2024. This implies a painful 35% reduction in Wave Life Sciences' revenue over the past 12 months. Losses are forecast to balloon 68% to US$0.99 per share. Before this latest report, the consensus had been expecting revenues of US$62.5m and US$0.88 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts lifting this year's revenue estimates, while at the same time increasing their loss per share numbers to reflect the cost of achieving this growth.

The consensus price target stayed unchanged at US$13.25, seeming to suggest that higher forecast losses are 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. 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. 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 a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 57% by the end of 2024. This indicates a significant reduction from annual growth of 43% 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 9.8% annually for the foreseeable future. It's pretty clear that Wave Life Sciences' revenues are expected to perform substantially worse than 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 Wave Life Sciences. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. The consensus price target held steady at US$13.25, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Wave Life Sciences. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Wave Life Sciences going out to 2026, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 2 warning signs for Wave Life Sciences 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.