This Just In: Analysts Are Boosting Their Alector, Inc. (NASDAQ:ALEC) Outlook for This Year

Shareholders in Alector, Inc. (NASDAQ:ALEC) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term 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 this upgrade, Alector's seven analysts are now forecasting revenues of US$67m in 2021. This would be a major 211% improvement in sales compared to the last 12 months. Losses are expected to be contained, narrowing 18% from last year to US$2.21. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$45m and losses of US$2.63 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.

View our latest analysis for Alector

Despite these upgrades, the analysts have not made any major changes to their price target of US$42.50, implying that their latest estimates don't have a long term impact on what they think the stock is worth. 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 Alector at US$57.00 per share, while the most bearish prices it at US$30.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Alector is forecast to grow faster in the future than it has in the past, with revenues expected to display 9x annualised growth until the end of 2021. If achieved, this would be a much better result than the 4.4% annual decline over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 9.1% per year. Not only are Alector's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Alector's prospects. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Alector could be a good candidate for more research.

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 Alector analysts - 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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