Stock Analysis

Forecast: Analysts Think Immunocore Holdings plc's (NASDAQ:IMCR) Business Prospects Have Improved Drastically

  •  Updated
NasdaqGS:IMCR
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Immunocore Holdings plc (NASDAQ:IMCR) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investors have been pretty optimistic on Immunocore Holdings too, with the stock up 17% to US$65.08 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.

After the upgrade, the nine analysts covering Immunocore Holdings are now predicting revenues of UK£164m in 2023. If met, this would reflect a sizeable 60% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 39% to UK£0.71. However, before this estimates update, the consensus had been expecting revenues of UK£140m and UK£1.20 per share in losses. 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.

Our analysis indicates that IMCR is potentially undervalued!

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NasdaqGS:IMCR Earnings and Revenue Growth November 16th 2022

Despite these upgrades, the analysts have not made any major changes to their price target of UK£62.51, implying that their latest estimates don't have a long term impact on what they think the stock is worth. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Immunocore Holdings at UK£86.85 per share, while the most bearish prices it at UK£33.37. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Immunocore Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 46% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 31% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 14% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Immunocore Holdings to grow faster than the wider industry.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses next year, perhaps suggesting Immunocore Holdings is moving incrementally towards profitability. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to next year's earnings expectations, it might be time to take another look at Immunocore Holdings.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Immunocore Holdings going out to 2024, and you can see them free on our platform here..

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.

What are the risks and opportunities for Immunocore Holdings?

Immunocore Holdings plc, a commercial-stage biotechnology company, engages in the development of immunotherapies for the treatment of cancer, infectious, and autoimmune diseases.

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Rewards

  • Trading at 73% below our estimate of its fair value

  • Earnings are forecast to grow 65.91% per year

Risks

  • Shareholders have been diluted in the past year

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Immunocore Holdings

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