The Alector, Inc. (NASDAQ:ALEC) Full-Year Results Are Out And Analysts Have Published New Forecasts
Alector, Inc. (NASDAQ:ALEC) defied analyst predictions to release its full-year results, which were ahead of market expectations. Revenues beat expectations coming in atUS$97m, ahead of estimates by 6.5%. Statutory losses were somewhat smaller thanthe analysts expected, coming in at US$1.56 per share. Following the result, the 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
View our latest analysis for Alector
After the latest results, the consensus from Alector's ten analysts is for revenues of US$62.0m in 2024, which would reflect a substantial 36% decline in revenue compared to the last year of performance. Per-share losses are expected to explode, reaching US$1.68 per share. Before this earnings announcement, the analysts had been modelling revenues of US$99.5m and losses of US$2.08 per share in 2024. We can see there's definitely been a change in sentiment in this update, with the analysts administering a meaningful downgrade to next year's revenue estimates, while at the same time reducing their loss estimates.
The consensus price target was broadly unchanged at US$15.80, implying that the business is performing roughly in line with expectations, despite adjustments to both revenue and earnings estimates. 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. Currently, the most bullish analyst values Alector at US$41.00 per share, while the most bearish prices it at US$4.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that revenue is expected to reverse, with a forecast 36% annualised decline to the end of 2024. That is a notable change from historical growth of 36% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 18% per year. It's pretty clear that Alector's 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 reconfirmed their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. With that said, earnings are more important to the long-term value of the business. 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Alector analysts - going out to 2026, and you can see them free on our platform here.
Plus, you should also learn about the 5 warning signs we've spotted with Alector (including 1 which is potentially serious) .
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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.
