Heat Biologics, Inc. (NASDAQ:HTBX) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year’s forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline. Investors have been pretty optimistic on Heat Biologics too, with the stock up 33% to US$0.77 over the past week. It will be interesting to see if today’s upgrade is enough to propel the stock even higher.
Following the upgrade, the consensus from four analysts covering Heat Biologics is for revenues of US$1.7m in 2020, implying a stressful 49% decline in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 35% to US$0.34. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$933k and losses of US$0.35 per share in 2020. 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.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 49% revenue decline a notable change from historical growth of 42% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 24% next year. It’s pretty clear that Heat Biologics’ revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Heat Biologics is moving incrementally towards profitability. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Heat Biologics.
These earnings upgrades look like a sterling endorsement, but before diving in – you should know that we’ve spotted 6 potential flags with Heat Biologics, including major dilution from new stock issuance in the past year. You can learn more, and discover the 4 other flags we’ve identified, for free on our platform here.
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