Affimed N.V. (NASDAQ:AFMD) shares fell 3.6% to US$2.38 in the week since its latest third-quarter results. Sales were dismal, with revenues of €2.1m coming in some 48% below what analysts were forecasting. The only bright spot was that losses of €0.17 per share were 19% smaller than analysts had predicted. Following the result, 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 gathered the latest post-earnings forecasts to see what analysts are forecasting for next year.
Taking into account the latest results, the four analysts covering Affimed provided consensus estimates of €24.9m revenue in 2020, which would reflect a painful 38% decline on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 245% to €0.59. Yet prior to the latest earnings, analysts had been forecasting revenues of €40.9m and losses of €0.70 per share in 2020. So there's been quite a change-up of views after the latest results, with analysts making a serious cut to their revenue forecasts while also granting a nice increase in to the earnings per share numbers.
There was no major change to the €6.33 average analyst price target, suggesting that the adjustments to revenue and earnings are not expected to have a long-term impact on the business. 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. The most optimistic Affimed analyst has a price target of €9.06 per share, while the most pessimistic values it at €4.51. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Further, we can compare these estimates to past performance, and see how Affimed forecasts compare to the wider market's forecast performance. We would highlight that sales are expected to reverse, with the forecast 38% revenue decline a notable change from historical growth of 42% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 18% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Affimed to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that 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 market. Yet - earnings are more important to the intrinsic value of the business. The consensus price target held steady at €6.33, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Affimed going out to 2023, and you can see them free on our platform here.
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