Growth Investors: Industry Analysts Just Upgraded Their Fate Therapeutics, Inc. (NASDAQ:FATE) Revenue Forecasts By 25%
Fate Therapeutics, Inc. (NASDAQ:FATE) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. The analysts have sharply increased their revenue numbers, with a view that Fate Therapeutics will make substantially more sales than they'd previously expected. The market may be pricing in some blue sky too, with the share price gaining 11% to US$50.69 in the last 7 days. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
Following the upgrade, the current consensus from Fate Therapeutics' 13 analysts is for revenues of US$20m in 2021 which - if met - would reflect a satisfactory 6.7% increase on its sales over the past 12 months. Losses are forecast to narrow 7.0% to US$1.74 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$16m and losses of US$1.74 per share in 2021. So there's definitely been a change in sentiment in this update, with the analysts upgrading next year's revenue estimates, while at the same time holding losses per share steady.
View our latest analysis for Fate Therapeutics
The consensus price target rose 23% to US$51.73, with the analysts encouraged by the improved revenue outlook even though the company remains lossmaking. 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$71.00 and the most bearish at US$30.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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. It's pretty clear that there is an expectation that Fate Therapeutics' revenue growth will slow down substantially, with revenues next year expected to grow 6.7%, compared to a historical growth rate of 35% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 21% per year. Factoring in the forecast slowdown in growth, it seems obvious that Fate Therapeutics is also expected to grow slower than other industry participants.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses next year, perhaps suggesting Fate Therapeutics is moving incrementally towards profitability. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Fate Therapeutics.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Fate Therapeutics going out to 2024, and you can see them free on our platform here..
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks 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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