Analysts Have Lowered Expectations For Sage Therapeutics, Inc. After Its Latest Results

As you might know, Sage Therapeutics, Inc. (NASDAQ:SAGE) just kicked off its latest quarterly results with some very strong numbers. Revenues of US$3.6m beat estimates by a substantial 41% margin. Unfortunately, Sage Therapeutics also reported a loss of US$3.48 per share, which at least was smaller than analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see analysts' latest post-earnings forecasts for next year.

View our latest analysis for Sage Therapeutics

After the latest results, the 18 analysts covering Sage Therapeutics are now predicting revenues of US$91m in 2020. If met, this would reflect a major 1652% improvement in sales compared to the last 12 months. Losses are expected to increase slightly, to US$13.19 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$102m and losses of US$12.63 per share in 2020. There's been a definite change in sentiment after these results, with analysts administering a to next year's revenue estimates, while at the same time substantially upgrading EPS. It's almost as though the business is forecast to reduce its focus on growth to enhance profitability.

The average analyst price target was broadly unchanged at US$206, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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 Sage Therapeutics, with the most bullish analyst valuing it at US$265 and the most bearish at US$90.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Sage Therapeutics's past performance and to peers in the same market. For example, we noticed that Sage Therapeutics's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow at 1652%, well above its historical decline of 94% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue grow 18% per year. Although Sage Therapeutics's revenues are expected to improve, it seems that analysts are also expecting it to grow faster than the wider market.

The Bottom Line

The most important thing to take away is that analysts reduced their loss per share estimates for next year, perhaps highlighting increased optimism around Sage Therapeutics's prospects. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. The consensus price target held steady at US$206, with the latest estimates not enough to have an impact on analysts' estimated valuations.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Sage Therapeutics analysts - going out to 2023, and you can see them free on our platform here.

You can also see our analysis of Sage Therapeutics's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.