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AbCellera Biologics Inc. (NASDAQ:ABCL) Analysts Just Cut Their EPS Forecasts Substantially

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Simply Wall St
·3 min read
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The latest analyst coverage could presage a bad day for AbCellera Biologics Inc. (NASDAQ:ABCL), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. Investors however, have been notably more optimistic about AbCellera Biologics recently, with the stock price up a remarkable 22% to US$33.96 in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following the downgrade, the latest consensus from AbCellera Biologics' four analysts is for revenues of US$524m in 2021, which would reflect a huge 125% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 28% to US$0.96. Previously, the analysts had been modelling revenues of US$849m and earnings per share (EPS) of US$2.27 in 2021. It looks like analyst sentiment has declined substantially, with a pretty serious reduction to revenue estimates and a large cut to earnings per share numbers as well.

See our latest analysis for AbCellera Biologics

earnings-and-revenue-growth
earnings-and-revenue-growth

It'll come as no surprise then, to learn that the analysts have cut their price target 5.4% to US$52.40. 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. There are some variant perceptions on AbCellera Biologics, with the most bullish analyst valuing it at US$55.00 and the most bearish at US$45.00 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that AbCellera Biologics' revenue growth is expected to slow, with the forecast 125% annualised growth rate until the end of 2021 being well below the historical 1,898% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.1% annually. So it's pretty clear that, while AbCellera Biologics' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of AbCellera Biologics.

That said, the analysts might have good reason to be negative on AbCellera Biologics, given concerns around earnings quality. Learn more, and discover the 1 other risk we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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