Tango Therapeutics, Inc. (NASDAQ:TNGX) Second-Quarter Results Just Came Out: Here's What Analysts Are Forecasting For This Year

The investors in Tango Therapeutics, Inc.'s (NASDAQ:TNGX) will be rubbing their hands together with glee today, after the share price leapt 22% to US$5.22 in the week following its quarterly results. The results look positive overall; while revenues of US$5.8m were in line with analyst predictions, statutory losses were 9.7% smaller than expected, with Tango Therapeutics losing US$0.28 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Tango Therapeutics after the latest results.

View our latest analysis for Tango Therapeutics

After the latest results, the consensus from Tango Therapeutics' four analysts is for revenues of US$21.3m in 2022, which would reflect a definite 11% decline in sales compared to the last year of performance. Losses are expected to increase substantially, hitting US$1.22 per share. Before this earnings announcement, the analysts had been modelling revenues of US$22.3m and losses of US$1.32 per share in 2022. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers fell somewhat.

The consensus price target was broadly unchanged at US$15.40, implying that the business is performing roughly in line with expectations, despite adjustments to both revenue and earnings estimates. 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 Tango Therapeutics at US$20.00 per share, while the most bearish prices it at US$12.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 22% by the end of 2022. This indicates a significant reduction from annual growth of 7.2% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 15% per year. It's pretty clear that Tango Therapeutics' revenues are expected to perform substantially worse 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Yet - earnings are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Tango Therapeutics. Long-term earnings power is much more important than next year's profits. We have forecasts for Tango Therapeutics going out to 2024, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Tango Therapeutics (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.

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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.