Investors in Sesen Bio, Inc. (NASDAQ:SESN) had a good week, as its shares rose 4.7% to close at US$4.04 following the release of its quarterly results. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the consensus from Sesen Bio's three analysts is for revenues of US$17.1m in 2021, which would reflect a small 3.9% decline in sales compared to the last year of performance. Per-share losses are expected to explode, reaching US$0.60 per share. Before this latest report, the consensus had been expecting revenues of US$10.7m and US$0.56 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts lifting this year's revenue estimates, while at the same time increasing their loss per share numbers to reflect the cost of achieving this growth.
The average price target rose 105% to US$7.00, even thoughthe analysts have been updating their forecasts to show higher revenues and higher forecast losses. 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 Sesen Bio, with the most bullish analyst valuing it at US$8.00 and the most bearish at US$6.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing that stands out from these estimates is that revenues are expected to keep falling until the end of 2021, roughly in line with the historical decline of 7.9% per annum 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 10% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Sesen Bio to suffer worse than the wider 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 Sesen Bio. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. 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 in mind, we wouldn't be too quick to come to a conclusion on Sesen Bio. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Sesen Bio going out to 2023, and you can see them free on our platform here..
It is also worth noting that we have found 2 warning signs for Sesen Bio (1 is 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.
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