It's been a pretty great week for Avidity Biosciences, Inc. (NASDAQ:RNA) shareholders, with its shares surging 12% to US$46.72 in the week since its latest third-quarter results. Statutory losses were a bit smaller than expected, at just US$0.65 per share, even though revenues of US$2.3m missed analyst expectations by a shocking 49%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Avidity Biosciences after the latest results.

Taking into account the latest results, the consensus forecast from Avidity Biosciences' seven analysts is for revenues of US$13.8m in 2025. This reflects a substantial 36% improvement in revenue compared to the last 12 months. Per-share losses are expected to explode, reaching US$3.09 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$11.6m and losses of US$3.10 per share in 2025. So there's definitely been a change in sentiment in this update, with the analysts upgrading next year's revenue estimates, while at the same time holding losses per share steady.

There were no major changes to the US$67.91consensus price target despite the higher revenue estimates, with the analysts seeming to believe that ongoing losses have a larger impact on the valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Avidity Biosciences, with the most bullish analyst valuing it at US$96.00 and the most bearish at US$51.00 per share. This is a fairly broad spread of estimates, suggesting that 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. The analysts are definitely expecting Avidity Biosciences' growth to accelerate, with the forecast 28% annualised growth to the end of 2025 ranking favourably alongside historical growth of 16% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Avidity Biosciences is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Avidity Biosciences. 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 Avidity Biosciences 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 Avidity Biosciences you should be aware of, and 1 of them is concerning.

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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.