Analyst Estimates: Here's What Brokers Think Of NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) After Its Third-Quarter Report
It's been a good week for NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) shareholders, because the company has just released its latest quarterly results, and the shares gained 9.7% to US$20.50. NGM Biopharmaceuticals beat revenue forecasts by a solid 18%, hitting US$23m. Statutory losses also increased, with a per-share loss of US$0.43, slightly larger than what the analysts wereexpecting. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for NGM Biopharmaceuticals
Taking into account the latest results, the current consensus, from the eight analysts covering NGM Biopharmaceuticals, is for revenues of US$95.6m in 2021, which would reflect a discernible 3.2% reduction in NGM Biopharmaceuticals' sales over the past 12 months. Losses are forecast to balloon 21% to US$1.61 per share. Before this earnings announcement, the analysts had been modelling revenues of US$94.8m and losses of US$1.61 per share in 2021.
The consensus price target was unchanged at US$30.56, suggesting that the business - losses and all - is executing in line with estimates. 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. Currently, the most bullish analyst values NGM Biopharmaceuticals at US$39.00 per share, while the most bearish prices it at US$26.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 3.2%, a significant reduction from annual growth of 10% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.5% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - NGM Biopharmaceuticals is expected to lag 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 plus side, there were no major changes to revenue estimates; although 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 forecasts for NGM Biopharmaceuticals going out to 2024, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with NGM Biopharmaceuticals (at least 1 which is potentially serious) , and understanding these should be part of your investment process.
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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