Frequency Therapeutics, Inc. (NASDAQ:FREQ) Analysts Are More Bearish Than They Used To Be

Today is shaping up negative for Frequency Therapeutics, Inc. (NASDAQ:FREQ) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. At US$9.39, shares are up 8.2% in the past 7 days. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

After the downgrade, the four analysts covering Frequency Therapeutics are now predicting revenues of US$43m in 2021. If met, this would reflect a solid 15% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 56% to US$0.36. However, before this estimates update, the consensus had been expecting revenues of US$61m and US$0.13 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

See our latest analysis for Frequency Therapeutics

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Frequency Therapeutics' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Frequency Therapeutics' revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 27% over the past year. Compare this to the 564 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 17% per year. So it's pretty clear that, while Frequency Therapeutics' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Frequency Therapeutics. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. Given the serious cut to this year's outlook, it's clear that analysts have turned more bearish on Frequency Therapeutics, and we wouldn't blame shareholders for feeling a little more cautious themselves.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Frequency Therapeutics' financials, such as dilutive stock issuance over the past year. Learn more, and discover the 3 other risks we've identified, for 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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