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Seres Therapeutics, Inc. Consensus Forecasts Have Become A Little Darker Since Its Latest Report

Simply Wall St
·4 min read

Last week, you might have seen that Seres Therapeutics, Inc. (NASDAQ:MCRB) released its full-year result to the market. The early response was not positive, with shares down 6.2% to US$3.35 in the past week. The results were mixed overall, with revenues slightly ahead of analyst estimates at US$35m. Statutory losses by contrast were2.9% larger than predictions at US$1.24 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Seres Therapeutics after the latest results.

See our latest analysis for Seres Therapeutics

NasdaqGS:MCRB Past and Future Earnings, March 4th 2020
NasdaqGS:MCRB Past and Future Earnings, March 4th 2020

Following the recent earnings report, the consensus fromfive analysts covering Seres Therapeutics expects revenues of US$31.4m in 2020, implying a not inconsiderable 9.0% decline in sales compared to the last 12 months. Per-share losses are expected to creep up to US$1.13, on a statutory basis. Before this earnings announcement, analysts had been forecasting revenues of US$34.7m and losses of US$0.90 per share in 2020. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share forecasts.

The average analyst price target was broadly unchanged at US$7.35, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the 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. Currently, the most bullish analyst values Seres Therapeutics at US$11.00 per share, while the most bearish prices it at US$3.75. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 9.0% revenue decline a notable change from historical growth of 15% over the last three years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 16% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Seres Therapeutics to grow slower than the wider market.

The Bottom Line

The most important thing to take away is that analysts reduced their loss per share estimates for next year, perhaps highlighting increased optimism around Seres Therapeutics's prospects. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. 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.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Seres Therapeutics going out to 2024, and you can see them free on our platform here..

You can also see our analysis of Seres Therapeutics's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.