SOPHiA GENETICS SA (NASDAQ:SOPH) Just Reported, And Analysts Assigned A US$6.00 Price Target

Shareholders in SOPHiA GENETICS SA (NASDAQ:SOPH) had a terrible week, as shares crashed 25% to US$3.36 in the week since its latest second-quarter results. Results look to have been somewhat negative - revenue fell 9.4% short of analyst estimates at US$16m, although statutory losses were somewhat better. The per-share loss was US$0.23, 21% smaller than the analysts were expecting prior to the result. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for SOPHiA GENETICS

Taking into account the latest results, SOPHiA GENETICS' five analysts currently expect revenues in 2024 to be US$65.9m, approximately in line with the last 12 months. Losses are forecast to narrow 9.0% to US$0.92 per share. Before this earnings announcement, the analysts had been modelling revenues of US$76.0m and losses of US$0.99 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue forecasts while also reducing the estimated losses the business will incur.

The consensus price target fell 25% to US$6.00, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values SOPHiA GENETICS at US$7.00 per share, while the most bearish prices it at US$5.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that SOPHiA GENETICS' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.1% growth on an annualised basis. This is compared to a historical growth rate of 21% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 10% per year. Factoring in the forecast slowdown in growth, it seems obvious that SOPHiA GENETICS is also expected to grow slower than other industry participants.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Even so, long term profitability is more important for the value creation process. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for SOPHiA GENETICS going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for SOPHiA GENETICS that 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.