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The latest analyst coverage could presage a bad day for Heat Biologics, Inc. (NASDAQ:HTBX), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
After the downgrade, the consensus from Heat Biologics' four analysts is for revenues of US$1.5m in 2020, which would reflect a concerning 53% decline in sales compared to the last year of performance. Prior to the latest estimates, the analysts were forecasting revenues of US$1.8m in 2020. It looks like forecasts have become a fair bit less optimistic on Heat Biologics, given the measurable cut to revenue estimates.
The consensus price target rose 21% to US$4.38, with the analysts clearly more optimistic about Heat Biologics' prospects following this update. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Heat Biologics, with the most bullish analyst valuing it at US$5.00 and the most bearish at US$2.50 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 53%, a significant reduction from annual growth of 42% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 25% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Heat Biologics is expected to lag the wider industry.
The Bottom Line
The clear low-light was that analysts slashing their revenue forecasts for Heat Biologics this year. They're also anticipating slower revenue growth 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. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Heat Biologics after today.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Heat Biologics' business, like a short cash runway. For more information, you can click here to discover this and the 3 other concerns we've identified.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading 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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