Investors in ImmunoPrecise Antibodies Ltd. (CVE:IPA) had a good week, as its shares rose 5.9% to close at CA$14.76 following the release of its second-quarter results. Revenues were in line with expectations, at CA$4.8m, while statutory losses ballooned to CA$0.03 per share. Following the result, the analyst has 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analyst has changed their mind on ImmunoPrecise Antibodies after the latest results.
Taking into account the latest results, the current consensus from ImmunoPrecise Antibodies' one analyst is for revenues of CA$21.2m in 2021, which would reflect a substantial 27% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 56% to CA$0.08. Before this latest report, the consensus had been expecting revenues of CA$20.0m and CA$0.08 per share in losses.
The analyst increased their price target 55% to CA$20.00, perhaps signalling that higher revenues are a strong leading indicator for ImmunoPrecise Antibodies's valuation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that ImmunoPrecise Antibodies' revenue growth will slow down substantially, with revenues next year expected to grow 27%, compared to a historical growth rate of 42% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.8% next year. So it's pretty clear that, while ImmunoPrecise Antibodies' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most obvious conclusion is that the analyst made no changes to their forecasts for a loss next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analyst believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for ImmunoPrecise Antibodies you should know about.
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