Need To Know: Analysts Are Much More Bullish On AbCellera Biologics Inc. (NASDAQ:ABCL)

AbCellera Biologics Inc. (NASDAQ:ABCL) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.

After the upgrade, the consensus from AbCellera Biologics' seven analysts is for revenues of US$451m in 2022, which would reflect a perceptible 7.8% decline in sales compared to the last year of performance. Statutory earnings per share are supposed to plunge 27% to US$0.52 in the same period. Prior to this update, the analysts had been forecasting revenues of US$312m and earnings per share (EPS) of US$0.33 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

Check out our latest analysis for AbCellera Biologics

Despite these upgrades, the consensus price target fell 10% to US$30.00, perhaps signalling that the uplift in performance is not expected to last. 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 AbCellera Biologics, with the most bullish analyst valuing it at US$43.00 and the most bearish at US$14.00 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 10% by the end of 2022. This indicates a significant reduction from annual growth of 13% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - AbCellera Biologics is expected to lag the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. The declining price target is a puzzle, but still - with a serious upgrade to this year's expectations, it might be time to take another look at AbCellera Biologics.

Analysts are definitely bullish on AbCellera Biologics, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including dilutive stock issuance over the past year. You can learn more, and discover the 2 other warning signs 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.