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Inovio Pharmaceuticals, Inc. (NASDAQ:INO) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market seems to be pricing in some improvement in the business too, with the stock up 6.6% over the past week, closing at US$11.22. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.
Following the upgrade, the most recent consensus for Inovio Pharmaceuticals from its eight analysts is for revenues of US$143m in 2021 which, if met, would be a sizeable increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 55% to US$0.59. Yet before this consensus update, the analysts had been forecasting revenues of US$145m and losses of US$0.47 per share in 2021. While next year's revenue estimates held steady, there was also a loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The consensus price target held steady at US$13.29, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Inovio Pharmaceuticals, with the most bullish analyst valuing it at US$25.00 and the most bearish at US$8.00 per share. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Inovio Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with revenues forecast to grow many times over, well above its historical decline of 31% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 21% per year. So it looks like Inovio Pharmaceuticals is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Inovio Pharmaceuticals' revenues are expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Inovio Pharmaceuticals could be a good candidate for more research.
These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 4 potential flags with Inovio Pharmaceuticals, including major dilution from new stock issuance in the past year. You can learn more, and discover the 3 other flags we've identified, for 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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