SQZ Biotechnologies Company (NYSE:SQZ) Consensus Forecasts Have Become A Little Darker Since Its Latest Report

SQZ Biotechnologies Company (NYSE:SQZ) came out with its full-year results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. SQZ Biotechnologies beat revenue forecasts by a solid 16%, hitting US$21m. Statutory losses also blew out, with the loss per share reaching US$9.35, some 171% bigger than the analysts 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on SQZ Biotechnologies after the latest results.

See our latest analysis for SQZ Biotechnologies

Following last week's earnings report, SQZ Biotechnologies' three analysts are forecasting 2021 revenues to be US$20.6m, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 75% to US$2.38. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$25.1m and losses of US$2.26 per share in 2021. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The average price target was broadly unchanged at US$36.67, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. 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$35.00 per share. This is a very narrow spread of estimates, implying either that SQZ Biotechnologies is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 1.9% by the end of 2021. This indicates a significant reduction from annual growth of 4.4% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 18% annually for the foreseeable future. It's pretty clear that SQZ Biotechnologies' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. 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.

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 SQZ Biotechnologies analysts - 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 3 warning signs for SQZ Biotechnologies (1 can't be ignored!) that we have uncovered.

If you’re looking to trade SQZ Biotechnologies, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.