- Oops!Something went wrong.Please try again later.
Homology Medicines, Inc. (NASDAQ:FIXX) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects.
Following this upgrade, Homology Medicines' nine analysts are forecasting 2021 revenues to be US$33m, approximately in line with the last 12 months. Losses are expected to increase slightly, to US$1.89 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$28m and losses of US$1.95 per share in 2021. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
There was no major change to the consensus price target of US$24.11, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. 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 Homology Medicines, with the most bullish analyst valuing it at US$35.00 and the most bearish at US$8.00 per share. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Homology Medicines' revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 1.2% growth on an annualised basis. This is compared to a historical growth rate of 88% over the past three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 10% annually. Factoring in the forecast slowdown in growth, it seems obvious that Homology Medicines is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Homology Medicines' prospects. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Homology Medicines.
Analysts are definitely bullish on Homology Medicines, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including dilutive stock issuance over the past year. 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.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.