Fate Therapeutics, Inc. (NASDAQ:FATE) Just Reported And Analysts Have Been Lifting Their Price Targets
It's been a good week for Fate Therapeutics, Inc. (NASDAQ:FATE) shareholders, because the company has just released its latest yearly results, and the shares gained 4.5% to US$7.14. The results look positive overall; while revenues of US$64m were in line with analyst predictions, statutory losses were 4.3% smaller than expected, with Fate Therapeutics losing US$1.64 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for Fate Therapeutics
After the latest results, the consensus from Fate Therapeutics' 16 analysts is for revenues of US$4.81m in 2024, which would reflect a painful 92% decline in revenue compared to the last year of performance. Per-share losses are supposed to see a sharp uptick, reaching US$1.90. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$5.97m and losses of US$2.04 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue forecasts while also reducing the estimated losses the business will incur.
There was a decent 19% increase in the price target to US$7.53, with the analysts clearly signalling that the expected reduction in losses is a positive, despite a weaker revenue outlook. 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. There are some variant perceptions on Fate Therapeutics, with the most bullish analyst valuing it at US$12.00 and the most bearish at US$2.00 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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. We would highlight that revenue is expected to reverse, with a forecast 92% annualised decline to the end of 2024. That is a notable change from historical growth of 47% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 18% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Fate Therapeutics 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 negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Even so, long term profitability is more important for the value creation process. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Fate Therapeutics going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 4 warning signs for Fate Therapeutics (1 can't be ignored!) that we have uncovered.
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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.
