Analysts Have Been Trimming Their 2seventy bio, Inc. (NASDAQ:TSVT) Price Target After Its Latest Report

There's been a major selloff in 2seventy bio, Inc. (NASDAQ:TSVT) shares in the week since it released its quarterly report, with the stock down 22% to US$3.92. Revenues of US$14m came in a modest 7.0% below forecasts. Statutory losses were a relative bright spot though, with a per-share loss of US$0.19 coming in a substantial 21% smaller than what the analysts had expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for 2seventy bio

After the latest results, the five analysts covering 2seventy bio are now predicting revenues of US$74.0m in 2025. If met, this would reflect a huge 62% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 76% to US$0.45. Before this earnings announcement, the analysts had been modelling revenues of US$76.3m and losses of US$0.44 per share in 2025. So it's pretty clear consensus is more negative on 2seventy bio after the new consensus numbers; while the analysts trimmed their revenue estimates, they also administered a modest increase to per-share loss expectations.

The average price target fell 23% to US$8.25, implicitly signalling that lower earnings per share are a leading indicator for 2seventy bio's valuation. 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. Currently, the most bullish analyst values 2seventy bio at US$15.00 per share, while the most bearish prices it at US$2.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the 2seventy bio's past performance and to peers in the same industry. 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 47% annualised growth until the end of 2025. If achieved, this would be a much better result than the 6.2% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 22% per year. So it looks like 2seventy bio is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded 2seventy bio's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of 2seventy bio's future valuation.

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 estimates - from multiple 2seventy bio analysts - going out to 2026, and you can see them free on our platform here.

You can also see whether 2seventy bio is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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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.