The latest analyst coverage could presage a bad day for Sangamo Therapeutics, Inc. (NASDAQ:SGMO), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. Shares are up 9.3% to US$17.05 in the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
After the downgrade, the consensus from Sangamo Therapeutics' ten analysts is for revenues of US$104m in 2021, which would reflect a substantial 29% decline in sales compared to the last year of performance. Per-share losses are expected to explode, reaching US$1.07 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$119m and losses of US$0.96 per share in 2021. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 29%, a significant reduction from annual growth of 35% 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 20% 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 most important thing to take away is that analysts increased their loss per share estimates for next year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Sangamo Therapeutics' revenues are expected to grow slower than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on Sangamo Therapeutics, and their negativity could be grounds for caution.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Sangamo Therapeutics going out to 2025, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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