As you might know, Progenity, Inc. (NASDAQ:PROG) last week released its latest annual, and things did not turn out so great for shareholders. It looks like a pretty negative result overall with revenues of US$74m coming in 13% short of analyst estimates. Statutory losses were US$7.01 per share, 18% larger than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus from Progenity's four analysts is for revenues of US$134.1m in 2021, which would reflect a sizeable 80% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 56% to US$3.06. Before this latest report, the consensus had been expecting revenues of US$134.1m and US$3.06 per share in losses.
As a result, it's unexpected to see that the consensus price target fell 15% to US$8.00, with the analysts seemingly becoming more concerned about ongoing losses, despite making no major changes to their forecasts. 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 Progenity, with the most bullish analyst valuing it at US$12.00 and the most bearish at US$5.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Progenity's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 80% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 48% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 7.2% per year. Not only are Progenity's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Progenity's future valuation.
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 Progenity analysts - going out to 2023, and you can see them free on our platform here.
Even so, be aware that Progenity is showing 3 warning signs in our investment analysis , and 1 of those is a bit concerning...
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