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Shareholders in AC Immune SA (NASDAQ:ACIU) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. The market seems to be pricing in some improvement in the business too, with the stock up 6.7% over the past week, closing at US$6.33. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.
After the upgrade, the three analysts covering AC Immune are now predicting revenues of CHF57m in 2021. If met, this would reflect a substantial 258% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 42% to CHF0.50. Yet prior to the latest estimates, the analysts had been forecasting revenues of CHF50m and losses of CHF0.61 per share in 2021. 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.
The consensus price target rose 7.7% to CHF11.05, with the analysts encouraged by the higher revenue and lower forecast losses for next year. 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. The most optimistic AC Immune analyst has a price target of CHF17.00 per share, while the most pessimistic values it at CHF4.99. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the AC Immune's past performance and to peers in the same industry. It's clear from the latest estimates that AC Immune's rate of growth is expected to accelerate meaningfully, with the forecast 258% revenue growth noticeably faster than its historical growth of 15% 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 20% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that AC Immune is expected to grow much faster than its 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 AC Immune's prospects. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, AC Immune could be worth investigating further.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for AC Immune going out to 2025, and you can see them free on our platform here..
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.
This article by Simply Wall St is general in nature. 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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