Earnings Release: Here's Why Analysts Cut Their Poseida Therapeutics, Inc. (NASDAQ:PSTX) Price Target To US$16.25

It's been a sad week for Poseida Therapeutics, Inc. (NASDAQ:PSTX), who've watched their investment drop 12% to US$2.18 in the week since the company reported its quarterly result. Revenues of US$1.4m crushed expectations, although expenses also blew out, with the company reporting a statutory loss per share of US$0.93, 40% bigger than analysts expected. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Poseida Therapeutics

Taking into account the latest results, the five analysts covering Poseida Therapeutics provided consensus estimates of US$5.88m revenue in 2022, which would reflect a disturbing 82% decline on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$3.34 per share. Before this latest report, the consensus had been expecting revenues of US$4.78m and US$2.67 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts significantly increasing their revenue forecasts while also expecting losses per share to increase. It looks like the revenue growth will not be achieved without incremental costs.

It will come as no surprise that expanding losses caused the consensus price target to fall 32% to US$16.25with the analysts implicitly ranking ongoing losses as a greater concern than growing revenues. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Poseida Therapeutics, with the most bullish analyst valuing it at US$24.00 and the most bearish at US$9.00 per share. 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.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Poseida Therapeutics. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 estimates - from multiple Poseida Therapeutics analysts - going out to 2024, and you can see them free on our platform here.

It is also worth noting that we have found 4 warning signs for Poseida Therapeutics (2 are a bit concerning!) that you need to take into consideration.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.