Bullish: Analysts Just Made A Noticeable Upgrade To Their Precigen, Inc. (NASDAQ:PGEN) Forecasts
Precigen, Inc. (NASDAQ:PGEN) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. The market may be pricing in some blue sky too, with the share price gaining 22% to US$1.95 in the last 7 days. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the latest upgrade, the current consensus, from the two analysts covering Precigen, is for revenues of US$39m in 2023, which would reflect a concerning 67% reduction in Precigen's sales over the past 12 months. Per-share losses are expected to see a sharp uptick, reaching US$0.40. Yet before this consensus update, the analysts had been forecasting revenues of US$26m and losses of US$0.49 per share in 2023. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
See our latest analysis for Precigen
The consensus price target fell 20%, to US$9.10, suggesting that the analysts remain pessimistic on the company, despite the improved earnings and revenue outlook. 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 Precigen at US$14.00 per share, while the most bearish prices it at US$4.20. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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. Over the past five years, revenues have declined around 22% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 59% decline in revenue until the end of 2023. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 14% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Precigen to suffer worse than the wider industry.
The Bottom Line
The most important thing here is that analysts reduced their loss per share estimates for next year, reflecting increased optimism around Precigen's prospects. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. A lower price target is not intuitively what we would expect from a company whose business prospects are improving - at least judging by these forecasts - but if the underlying fundamentals are strong, Precigen could be one for the watch list.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 4 potential risks with Precigen, including a short cash runway. For more information, you can click through to our platform to learn more about this and the 2 other risks we've identified .
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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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