Adaptimmune Therapeutics plc (NASDAQ:ADAP) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. Adaptimmune Therapeutics has also found favour with investors, with the stock up an incredible 92% to US$11.07 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the upgrade, the latest consensus from Adaptimmune Therapeutics' six analysts is for revenues of US$4.2m in 2020, which would reflect a sizeable 122% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$3.5m in 2020. It looks like there's been a clear increase in optimism around Adaptimmune Therapeutics, given the chunky increase in revenue forecasts.
Additionally, the consensus price target for Adaptimmune Therapeutics increased 126% to US$10.40, showing a clear increase in optimism from the analysts involved. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Adaptimmune Therapeutics analyst has a price target of US$15.00 per share, while the most pessimistic values it at US$3.00. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. 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.
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. It's clear from the latest estimates that Adaptimmune Therapeutics' rate of growth is expected to accelerate meaningfully, with the forecast 122% revenue growth noticeably faster than its historical growth of 17% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 24% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Adaptimmune Therapeutics to grow faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. They're also forecasting more rapid revenue growth than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Adaptimmune Therapeutics could be worth investigating further.
Analysts are clearly in love with Adaptimmune Therapeutics at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as dilutive stock issuance over the past year. For more information, you can click through to our platform to learn more about this and the 4 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.
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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. Thank you for reading.