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Seres Therapeutics, Inc. (NASDAQ:MCRB) Analysts Just Slashed This Year's Revenue Estimates By 59%

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Market forces rained on the parade of Seres Therapeutics, Inc. (NASDAQ:MCRB) shareholders today, when the analysts downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the consensus from seven analysts covering Seres Therapeutics is for revenues of US$20m in 2022, implying a sizeable 86% decline in sales compared to the last 12 months. Losses are supposed to balloon 181% to US$2.00 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$50m and losses of US$1.85 per share in 2022. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

See our latest analysis for Seres Therapeutics

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earnings-and-revenue-growth

The consensus price target fell 6.7% to US$17.86, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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 Seres Therapeutics, with the most bullish analyst valuing it at US$32.00 and the most bearish at US$6.00 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. 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.

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 93% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 32% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 12% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Seres Therapeutics is expected to lag the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Seres Therapeutics. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Seres Therapeutics' revenues are expected to grow slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Seres Therapeutics' future valuation. Given the stark change in sentiment, we'd understand if investors became more cautious on Seres Therapeutics after today.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Seres Therapeutics analysts - going out to 2024, and you can see them free on our platform here.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.