CRISPR Therapeutics AG (NASDAQ:CRSP) just released its latest second-quarter results and things are looking bullish. Statutory earnings performance was extremely strong, with revenue of US$901m beating expectations by 116% and earnings per share (EPS) of US$9.44, an impressive 145%ahead of expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the 17 analysts covering CRISPR Therapeutics provided consensus estimates of US$746.6m revenue in 2021, which would reflect a chunky 17% decline on its sales over the past 12 months. Statutory earnings per share are expected to nosedive 23% to US$4.68 in the same period. Before this earnings announcement, the analysts had been modelling revenues of US$429.0m and losses of US$0.25 per share in 2021. It looks like there's been a definite improvement in business conditions, with a revenue upgrade expected to lead to profitability sooner than previously forecast.
Despite these upgrades,the analysts have not made any major changes to their price target of US$163, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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. Currently, the most bullish analyst values CRISPR Therapeutics at US$220 per share, while the most bearish prices it at US$117. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 31% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 67% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 10% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - CRISPR Therapeutics is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that there's been a clear step-change in belief around the business' prospects, with the analysts now expecting CRISPR Therapeutics to become profitable next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. 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. We have estimates - from multiple CRISPR Therapeutics analysts - going out to 2023, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for CRISPR Therapeutics (1 can't be ignored) you should be aware of.
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