Forecast: Analysts Think Gritstone bio, Inc.'s (NASDAQ:GRTS) Business Prospects Have Improved Drastically
Celebrations may be in order for Gritstone bio, Inc. (NASDAQ:GRTS) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.
Following the upgrade, the current forecast from Gritstone bio's six analysts is for revenues of US$70m in 2024, which would reflect a substantial improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 22% to US$1.14. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$51m and losses of US$1.28 per share in 2024. 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.
View our latest analysis for Gritstone bio
There was no major change to the consensus price target of US$9.96, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Gritstone bio's rate of growth is expected to accelerate meaningfully, with the forecast 4x annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 29% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 16% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Gritstone bio to grow faster 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 Gritstone bio's prospects. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to next year's earnings expectations, it might be time to take another look at Gritstone bio.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 5 potential warning signs with Gritstone bio, including a short cash runway. For more information, you can click through to our platform to learn more about this and the 2 other warning signs we've identified .
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.
