Analysts Just Published A Bright New Outlook For Sangamo Therapeutics, Inc.'s (NASDAQ:SGMO)

Sangamo Therapeutics, Inc. (NASDAQ:SGMO) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

After the upgrade, the consensus from Sangamo Therapeutics' nine analysts is for revenues of US$233m in 2023, which would reflect a noticeable 3.3% decline in sales compared to the last year of performance. The loss per share is anticipated to greatly reduce in the near future, narrowing 26% to US$0.55. However, before this estimates update, the consensus had been expecting revenues of US$153m and US$1.14 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

Check out our latest analysis for Sangamo Therapeutics

The consensus price target fell 12%, to US$7.38, suggesting that the analysts remain pessimistic on the company, despite the improved earnings and revenue outlook. 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. The most optimistic Sangamo Therapeutics analyst has a price target of US$16.00 per share, while the most pessimistic values it at US$1.50. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 4.4% by the end of 2023. This indicates a significant reduction from annual growth of 18% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 19% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Sangamo Therapeutics is expected to lag the wider industry.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Sangamo Therapeutics is moving incrementally towards profitability. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. A lower price target is not intuitively what we would expect from a company whose business prospects are improving - at least judging by these forecasts - but if the underlying fundamentals are strong, Sangamo Therapeutics could be one for the watch list.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 4 potential risks with Sangamo Therapeutics, including a short cash runway. For more information, you can click through to our platform to learn more about this and the 3 other risks we've identified .

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.