Earnings Release: Here's Why Analysts Cut Their C4 Therapeutics, Inc. (NASDAQ:CCCC) Price Target To US$29.00

By
Simply Wall St
Published
May 10, 2022
NasdaqGS:CCCC
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C4 Therapeutics, Inc. (NASDAQ:CCCC) missed earnings with its latest first-quarter results, disappointing overly-optimistic forecasters. It was a pretty negative result overall, with revenues of US$7.7m missing analyst predictions by 4.9%. Additionally, the business reported a statutory loss of US$0.65 per share, larger than the analysts had forecast prior to the result. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for C4 Therapeutics

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NasdaqGS:CCCC Earnings and Revenue Growth May 10th 2022

After the latest results, the consensus from C4 Therapeutics' eleven analysts is for revenues of US$35.0m in 2022, which would reflect a painful 24% decline in sales compared to the last year of performance. Per-share losses are expected to explode, reaching US$2.61 per share. Before this earnings announcement, the analysts had been modelling revenues of US$35.6m and losses of US$2.50 per share in 2022. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although sales forecasts held steady, the consensus also made a pronounced increase to its losses per share forecasts.

With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 11% to US$29.00, with the analysts signalling that growing losses would be a definite concern. 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 C4 Therapeutics, with the most bullish analyst valuing it at US$84.00 and the most bearish at US$10.00 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the 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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 31% by the end of 2022. This indicates a significant reduction from annual growth of 36% 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 11% per year. It's pretty clear that C4 Therapeutics' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that C4 Therapeutics' revenues are expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for C4 Therapeutics going out to 2024, and you can see them free on our platform here.

You still need to take note of risks, for example - C4 Therapeutics has 4 warning signs (and 1 which is significant) we think you should know about.

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