Analysts Are Upgrading Stoke Therapeutics, Inc. (NASDAQ:STOK) After Its Latest Results

A week ago, Stoke Therapeutics, Inc. (NASDAQ:STOK) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. The results were impressive, with revenues of US$5.2m exceeding analyst forecasts by 47%, and statutory losses of US$0.53 were likewise much smaller than the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Stoke Therapeutics

Following the latest results, Stoke Therapeutics' eight analysts are now forecasting revenues of US$17.8m in 2023. This would be a substantial 22% improvement in sales compared to the last 12 months. Per-share losses are supposed to see a sharp uptick, reaching US$2.64. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$13.8m and losses of US$2.79 per share in 2023. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

There was no major change to the consensus price target of US$25.52, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Stoke Therapeutics at US$35.00 per share, while the most bearish prices it at US$12.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Stoke Therapeutics' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Stoke Therapeutics' revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 31% growth on an annualised basis. This is compared to a historical growth rate of 133% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 18% annually. Even after the forecast slowdown in growth, it seems obvious that Stoke Therapeutics is also expected to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at US$25.52, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Stoke Therapeutics. 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 Stoke Therapeutics going out to 2025, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 3 warning signs for Stoke Therapeutics that you should be aware of.

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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.