Results: Adicet Bio, Inc. Confounded Analyst Expectations With A Surprise Profit

There's been a major selloff in Adicet Bio, Inc. (NASDAQ:ACET) shares in the week since it released its first-quarter report, with the stock down 21% to US$11.83. In addition to smashing expectations with revenues of US$25m, Adicet Bio delivered a surprise statutory profit of US$0.10 per share, a notable improvement compared to analyst expectations of a loss. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Adicet Bio

Following the recent earnings report, the consensus from nine analysts covering Adicet Bio is for revenues of US$25.0m in 2022, implying a painful 35% decline in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$1.48 per share. Before this latest report, the consensus had been expecting revenues of US$27.6m and US$1.51 per share in losses. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers fell somewhat.

The consensus price target was broadly unchanged at US$28.89, implying that the business is performing roughly in line with expectations, despite adjustments to both revenue and earnings estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Adicet Bio, with the most bullish analyst valuing it at US$35.00 and the most bearish at US$21.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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 44% by the end of 2022. This indicates a significant reduction from annual growth of 225% 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 12% annually for the foreseeable future. It's pretty clear that Adicet Bio's revenues are expected to perform substantially worse 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$28.89, with the latest estimates not enough to have an impact on their price targets.

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 Adicet Bio analysts - going out to 2024, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 4 warning signs for Adicet Bio you should be aware of, and 1 of them is a bit concerning.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.