AbCellera Biologics Inc. (NASDAQ:ABCL) Analysts Are More Bearish Than They Used To Be

Today is shaping up negative for AbCellera Biologics Inc. (NASDAQ:ABCL) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. The stock price has risen 9.0% to US$17.66 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.

After the downgrade, the consensus from AbCellera Biologics' five analysts is for revenues of US$267m in 2021, which would reflect a sizeable 40% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to plunge 59% to US$0.37 in the same period. Previously, the analysts had been modelling revenues of US$346m and earnings per share (EPS) of US$0.56 in 2021. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for AbCellera Biologics

Despite the cuts to forecast earnings, there was no real change to the US$45.40 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on AbCellera Biologics, with the most bullish analyst valuing it at US$55.00 and the most bearish at US$25.00 per share. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 64% by the end of 2021. This indicates a significant reduction from annual growth of 1,886% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.8% annually for the foreseeable future. It's pretty clear that AbCellera Biologics' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of AbCellera Biologics.

There might be good reason for analyst bearishness towards AbCellera Biologics, like recent substantial insider selling. Learn more, and discover the 2 other risks we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.
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