As you might know, Seres Therapeutics, Inc. (NASDAQ:MCRB) last week released its latest third-quarter, and things did not turn out so great for shareholders. It was not a great statutory result, with revenues coming in 82% lower than the analysts predicted. Unsurprisingly, earnings also fell seriously short of forecasts, turning into a per-share loss of US$0.36. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, Seres Therapeutics' seven analysts currently expect revenues in 2021 to be US$22.9m, approximately in line with the last 12 months. Losses are expected to increase substantially, hitting US$1.39 per share. Before this earnings announcement, the analysts had been modelling revenues of US$30.2m and losses of US$1.29 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.
The analysts lifted their price target 11% to US$37.50, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Seres Therapeutics at US$49.00 per share, while the most bearish prices it at US$24.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Seres Therapeutics' past performance and to peers in the same industry. Over the past three years, revenues have declined around 1.1% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 1.6% decline in revenue next year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 20% per year. So while a broad number of companies are forecast to decline, unfortunately Seres Therapeutics is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Seres Therapeutics. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Seres Therapeutics analysts - going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 3 warning signs for Seres Therapeutics you should be aware of.
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