2seventy bio, Inc. (NASDAQ:TSVT) Just Reported Annual Earnings And Analysts Are Lifting Their Estimates

2seventy bio, Inc. (NASDAQ:TSVT) investors will be delighted, with the company turning in some strong numbers with its latest results. Results clearly exceeded expectations, with a substantial revenue beat leading to smaller losses in what looks like a definite win for investors. Revenues were US$91m and the statutory loss per share was US$7.13, smaller than the analysts had forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for 2seventy bio

Taking into account the latest results, the most recent consensus for 2seventy bio from seven analysts is for revenues of US$128.3m in 2023 which, if met, would be a sizeable 40% increase on its sales over the past 12 months. Losses are supposed to decline, shrinking 13% from last year to US$4.42. Before this earnings announcement, the analysts had been modelling revenues of US$114.6m and losses of US$4.82 per share in 2023. 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.

There was no major change to the consensus price target of US$27.67, perhaps suggesting that the analysts remain concerned about ongoing losses 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 2seventy bio analyst has a price target of US$34.00 per share, while the most pessimistic values it at US$21.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await 2seventy bio shareholders.

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. One thing stands out from these estimates, which is that 2seventy bio is forecast to grow faster in the future than it has in the past, with revenues expected to display 40% annualised growth until the end of 2023. If achieved, this would be a much better result than the 23% annual decline over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 14% per year. Not only are 2seventy bio's revenues expected to improve, it seems that the analysts are also expecting it 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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$27.67, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for 2seventy bio going out to 2025, and you can see them free on our platform here.

Before you take the next step you should know about the 5 warning signs for 2seventy bio (2 make us uncomfortable!) that we have uncovered.

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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.