Gritstone bio, Inc. (NASDAQ:GRTS) Just Reported And Analysts Have Been Cutting Their Estimates
Gritstone bio, Inc. (NASDAQ:GRTS) just released its latest yearly results and things are looking bullish. Overall results were decent, with revenues of US$16m beating estimates by54%. Statutory losses were subsequently less thanthe analysts had expected, at US$1.20 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for Gritstone bio
Taking into account the latest results, the current consensus from Gritstone bio's seven analysts is for revenues of US$36.7m in 2024. This would reflect a sizeable 125% increase on its revenue over the past 12 months. Losses are expected to be contained, narrowing 19% from last year to US$1.14. Before this latest report, the consensus had been expecting revenues of US$57.9m and US$1.15 per share in losses. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to next year's revenue estimates, while at the same time holding losses per share steady.
The analysts have cut their price target 12% to US$8.80per share, signalling that the declining revenue and ongoing losses are contributing to the lower 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. The most optimistic Gritstone bio analyst has a price target of US$20.00 per share, while the most pessimistic values it at US$4.00. 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 analysts think this business will perform. 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.
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 Gritstone bio's growth to accelerate, with the forecast 125% annualised growth to the end of 2024 ranking favourably alongside historical growth of 23% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 18% annually. 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 obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. They also downgraded Gritstone bio's revenue estimates, but industry data suggests that it is expected 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 Gritstone bio's 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. We have forecasts for Gritstone bio going out to 2026, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 5 warning signs for Gritstone bio you should be aware of, and 3 of them are concerning.
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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.
