Stock Analysis

Precigen, Inc. (NASDAQ:PGEN) Just Reported First-Quarter Earnings And Analysts Are Lifting Their Estimates

  •  Updated
Source: Shutterstock

A week ago, Precigen, Inc. (NASDAQ:PGEN) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Sales crushed expectations at US$32m, beating expectations by 38%. Precigen reported a statutory loss of US$0.10 per share, which - although not amazing - was much smaller than the analysts predicted. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Precigen

NasdaqGS:PGEN Earnings and Revenue Growth May 12th 2022

Following the latest results, Precigen's five analysts are now forecasting revenues of US$117.5m in 2022. This would be an okay 5.5% improvement in sales compared to the last 12 months. Losses are expected to hold steady at around US$0.45. Before this earnings announcement, the analysts had been modelling revenues of US$97.0m and losses of US$0.46 per share in 2022. So there's definitely been a change in sentiment in this update, with the analysts upgrading this year's revenue estimates, while at the same time holding losses per share steady.

There were no major changes to the US$12.20consensus price target despite the higher revenue estimates, with the analysts seeming to believe that ongoing losses have a larger impact on the valuation than growing sales. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Precigen analyst has a price target of US$17.00 per share, while the most pessimistic values it at US$6.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. One thing stands out from these estimates, which is that Precigen is forecast to grow faster in the future than it has in the past, with revenues expected to display 7.3% annualised growth until the end of 2022. If achieved, this would be a much better result than the 20% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 12% per year. Although Precigen's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Precigen going out to 2024, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Precigen , and understanding them should be part of your investment process.

Valuation is complex, but we're helping make it simple.

Find out whether Precigen is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis