New Forecasts: Here's What Analysts Think The Future Holds For Alector, Inc. (NASDAQ:ALEC)

Celebrations may be in order for Alector, Inc. (NASDAQ:ALEC) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that Alector will make substantially more sales than they'd previously expected. The market may be pricing in some blue sky too, with the share price gaining 68% to US$35.21 in the last 7 days. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

Following the upgrade, the most recent consensus for Alector from its seven analysts is for revenues of US$36m in 2021 which, if met, would be a major 100% increase on its sales over the past 12 months. Losses are expected to increase slightly, to US$2.63 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$32m and losses of US$2.82 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

Check out our latest analysis for Alector

It will come as no surprise to learn that the analysts have increased their price target for Alector 16% to US$37.25 on the back of these upgrades. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Alector analyst has a price target of US$54.00 per share, while the most pessimistic values it at US$29.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Alector's past performance and to peers in the same industry. It's clear from the latest estimates that Alector's rate of growth is expected to accelerate meaningfully, with the forecast 152% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 4.7% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 13% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Alector to grow faster than the wider industry.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Alector is moving incrementally towards profitability. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Alector.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Alector going out to 2023, and you can see them 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. 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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