Need To Know: Analysts Are Much More Bullish On SQZ Biotechnologies Company (NYSE:SQZ)

SQZ Biotechnologies Company (NYSE:SQZ) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.

After this upgrade, SQZ Biotechnologies' four analysts are now forecasting revenues of US$31m in 2021. This would be a major 52% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 54% to US$2.21. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$22m and losses of US$3.07 per share in 2021. 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.

See our latest analysis for SQZ Biotechnologies

Despite these upgrades, the analysts have not made any major changes to their price target of US$36.50, implying that their latest estimates don't have a long term impact on what they think the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on SQZ Biotechnologies, with the most bullish analyst valuing it at US$40.00 and the most bearish at US$31.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting SQZ Biotechnologies is an easy business to forecast or the underlying assumptions are obvious.

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. For example, we noticed that SQZ Biotechnologies' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 75% growth to the end of 2021 on an annualised basis. That is well above its historical decline of 6.1% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 14% per year. So it looks like SQZ Biotechnologies is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting SQZ Biotechnologies is moving incrementally towards profitability. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So SQZ Biotechnologies could be a good candidate for more research.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for SQZ Biotechnologies going out to 2025, and you can see them free on our platform here..

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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This article by Simply Wall St is general in nature. 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.
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