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It's been a pretty great week for AquaBounty Technologies, Inc. (NASDAQ:AQB) shareholders, with its shares surging 15% to US$2.03 in the week since its latest first-quarter results. Sales were dismal, with revenues of US$6.8k coming in some 66% below forecasts. The only bright spot was that statutory losses of US$0.11 per share were 17% smaller than the analysts had predicted. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on AquaBounty Technologies after the latest results.
Taking into account the latest results, the most recent consensus for AquaBounty Technologies from three analysts is for revenues of US$3.81m in 2020 which, if met, would be a sizeable 3888% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 29% to US$0.42. Before this latest report, the consensus had been expecting revenues of US$3.93m and US$0.40 per share in losses. So it's pretty clear consensus is more negative on AquaBounty Technologies after the new consensus numbers; while the analysts trimmed their revenue estimates, they also administered a per-share loss expectations.
There was no major change to the consensus price target of US$4.50, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values AquaBounty Technologies at US$5.00 per share, while the most bearish prices it at US$3.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await AquaBounty Technologies shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that AquaBounty Technologies' rate of growth is expected to accelerate meaningfully, with the forecast 30x revenue growth noticeably faster than its historical growth of 42%p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 19% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect AquaBounty Technologies to grow faster than the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at AquaBounty Technologies. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target held steady at US$4.50, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on AquaBounty Technologies. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for AquaBounty Technologies going out to 2022, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 6 warning signs for AquaBounty Technologies you should be aware of, and 3 of them shouldn't be ignored.
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