Earnings Beat: ADC Therapeutics SA (NYSE:ADCT) Just Beat Analyst Forecasts, And Analysts Have Been Lifting Their Forecasts
ADC Therapeutics SA (NYSE:ADCT) defied analyst predictions to release its full-year results, which were ahead of market expectations. Revenues and losses per share both beat expectations, with revenues of US$34m leading estimates by 2.8%. Statutory losses were somewhat smaller thanthe analysts expected, coming in at US$3.00 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on ADC Therapeutics after the latest results.
View our latest analysis for ADC Therapeutics
Taking into account the latest results, the current consensus from ADC Therapeutics' eight analysts is for revenues of US$117.6m in 2022, which would reflect a substantial 247% increase on its sales over the past 12 months. Per-share losses are predicted to creep up to US$3.08. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$96.8m and losses of US$3.27 per share in 2022. 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.
Yet despite these upgrades, the analysts cut their price target 16% to US$34.57, implicitly signalling that the ongoing losses are likely to weigh negatively on ADC Therapeutics' valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values ADC Therapeutics at US$54.00 per share, while the most bearish prices it at US$26.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting ADC Therapeutics' growth to accelerate, with the forecast 247% annualised growth to the end of 2022 ranking favourably alongside historical growth of 112% per annum 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 12% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect ADC Therapeutics to grow faster than 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. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of ADC Therapeutics' future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for ADC Therapeutics going out to 2024, and you can see them free on our platform here..
We don't want to rain on the parade too much, but we did also find 2 warning signs for ADC Therapeutics that you need to be mindful of.
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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.
