C4 Therapeutics, Inc. (NASDAQ:CCCC) just released its latest quarterly results and things are looking bullish. Results clearly exceeded expectations, with a substantial revenue beat leading to smaller losses in what looks like a definite win for investors. Revenues were US$14m and the statutory loss per share was US$0.56, smaller than the analysts had forecast. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the eleven analysts covering C4 Therapeutics provided consensus estimates of US$37.4m revenue in 2022, which would reflect a sizeable 25% decline on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$2.70 per share. Before this earnings announcement, the analysts had been modelling revenues of US$34.1m and losses of US$2.77 per share in 2022. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrades to both revenue and loss per share forecasts for this year.
The consensus price target fell 21%, to US$20.36, suggesting that the analysts remain pessimistic on the company, despite the improved earnings and revenue outlook. 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 C4 Therapeutics, with the most bullish analyst valuing it at US$84.00 and the most bearish at US$12.00 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 44% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 48% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 14% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - C4 Therapeutics is expected to lag the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on C4 Therapeutics. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple C4 Therapeutics analysts - going out to 2024, and you can see them free on our platform here.
Even so, be aware that C4 Therapeutics is showing 3 warning signs in our investment analysis , and 1 of those can't be ignored...
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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.
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