Stock Analysis

Industry Analysts Just Made A Sizeable Upgrade To Their Homology Medicines, Inc. (NASDAQ:FIXX) Revenue Forecasts

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Celebrations may be in order for Homology Medicines, Inc. (NASDAQ:FIXX) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.

Following the latest upgrade, the nine analysts covering Homology Medicines provided consensus estimates of US$28m revenue in 2021, which would reflect a definite 12% decline on its sales over the past 12 months. Losses are forecast to narrow 2.3% to US$1.95 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$23m and losses of US$1.99 per share in 2021. So there's definitely been a change in sentiment in this update, with the analysts upgrading this year's revenue estimates, while at the same time holding losses per share steady.

See our latest analysis for Homology Medicines

NasdaqGS:FIXX Earnings and Revenue Growth May 22nd 2021

Analysts trimmed their valuations, with the average price target falling 12% to US$24.56, with the ongoing losses clearly weighing on sentiment despite the upgraded revenue estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Homology Medicines, with the most bullish analyst valuing it at US$35.00 and the most bearish at US$12.00 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 16% by the end of 2021. This indicates a significant reduction from annual growth of 69% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 14% annually for the foreseeable future. It's pretty clear that Homology Medicines' revenues are expected to perform substantially worse 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 Homology Medicines' prospects. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Homology Medicines' future valuation. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Homology Medicines.

Analysts are definitely bullish on Homology Medicines, 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. For more information, you can click through to our platform to learn more about this and the 3 other risks we've identified .

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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