SOPHiA GENETICS SA (NASDAQ:SOPH) Just Reported Earnings, And Analysts Cut Their Target Price

It's been a mediocre week for SOPHiA GENETICS SA (NASDAQ:SOPH) shareholders, with the stock dropping 15% to US$8.65 in the week since its latest full-year results. The results overall were pretty much dead in line with analyst forecasts; revenues were US$40m and statutory losses were US$1.33 per share. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for SOPHiA GENETICS

Following the latest results, SOPHiA GENETICS' three analysts are now forecasting revenues of US$52.8m in 2022. This would be a major 31% improvement in sales compared to the last 12 months. Losses are forecast to balloon 26% to US$1.45 per share. Before this earnings announcement, the analysts had been modelling revenues of US$53.1m and losses of US$1.49 per share in 2022. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.

The consensus price target fell 15% to US$17.50despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on valuations. 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$18.00 per share, while the most bearish prices it at US$17.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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. It's pretty clear that there is an expectation that SOPHiA GENETICS' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 31% growth on an annualised basis. This is compared to a historical growth rate of 42% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% annually. Even after the forecast slowdown in growth, it seems obvious that SOPHiA GENETICS is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. 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.

With that in mind, we wouldn't be too quick to come to a conclusion on SOPHiA GENETICS. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple SOPHiA GENETICS analysts - going out to 2024, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for SOPHiA GENETICS (1 is a bit concerning!) that you need to take into consideration.

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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.