Gritstone bio, Inc. (NASDAQ:GRTS) Analysts Just Slashed This Year's Revenue Estimates By 40%

Market forces rained on the parade of Gritstone bio, Inc. (NASDAQ:GRTS) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. The stock price has risen 9.4% to US$1.86 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

After the downgrade, the consensus from Gritstone bio's five analysts is for revenues of US$10.0m in 2023, which would reflect an uncomfortable 15% decline in sales compared to the last year of performance. Losses are forecast to narrow 5.7% to US$1.32 per share. However, before this estimates update, the consensus had been expecting revenues of US$17m and US$1.29 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.

View our latest analysis for Gritstone bio

There was no major change to the consensus price target of US$8.67, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts.

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. We would highlight that sales are expected to reverse, with a forecast 27% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 38% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 15% per year. It's pretty clear that Gritstone bio's revenues are expected to perform substantially worse than the wider 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 Gritstone bio. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Gritstone bio after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Gritstone bio, including dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other concerns we've identified.

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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