Brokers Are Upgrading Their Views On Sutro Biopharma, Inc. (NASDAQ:STRO) With These New Forecasts

Celebrations may be in order for Sutro Biopharma, Inc. (NASDAQ:STRO) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance. The market may be pricing in some blue sky too, with the share price gaining 27% to US$4.56 in the last 7 days. Could this upgrade be enough to drive the stock even higher?

Following the latest upgrade, the eleven analysts covering Sutro Biopharma provided consensus estimates of US$69m revenue in 2024, which would reflect a concerning 59% decline on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$2.96 per share. However, before this estimates update, the consensus had been expecting revenues of US$56m and US$3.43 per share in losses. 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.

Check out our latest analysis for Sutro Biopharma

Despite these upgrades, the analysts have not made any major changes to their price target of US$12.00, implying that their latest estimates don't have a long term impact on what they think the stock is worth.

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 83% by the end of 2024. This indicates a significant reduction from annual growth of 26% 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 24% annually for the foreseeable future. It's pretty clear that Sutro Biopharma's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Sutro Biopharma is moving incrementally towards profitability. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Sutro Biopharma.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Sutro Biopharma analysts - going out to 2026, 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 upgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.