Results: Adicet Bio, Inc. Confounded Analyst Expectations With A Surprise Profit
Shareholders in Adicet Bio, Inc. (NASDAQ:ACET) had a terrible week, as shares crashed 21% to US$11.83 in the week since its latest quarterly results. Revenues beat expectations by 83%, and sales of US$25m were sufficient to generate a statutory profit of US$0.10 - a pleasant surprise given that the analysts were forecasting a loss! This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
See our latest analysis for Adicet Bio
After the latest results, the consensus from Adicet Bio's nine analysts is for revenues of US$25.0m in 2022, which would reflect a stressful 35% decline in sales compared to the last year of performance. Per-share losses are expected to explode, reaching US$1.48 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$27.6m and losses of US$1.51 per share in 2022. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers fell somewhat.
There was no major change to the US$28.89average price target, suggesting that the adjustments to revenue and earnings are not expected to have a long-term impact on the business. 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. There are some variant perceptions on Adicet Bio, with the most bullish analyst valuing it at US$35.00 and the most bearish at US$21.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
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. We would highlight that sales are expected to reverse, with a forecast 44% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 225% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 12% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Adicet Bio is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, long term profitability is more important for the value creation process. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Adicet Bio going out to 2024, and you can see them free on our platform here..
It is also worth noting that we have found 4 warning signs for Adicet Bio (1 makes us a bit uncomfortable!) that you need to take into consideration.
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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.