Sol-Gel Technologies Ltd. (NASDAQ:SLGL) Just Reported And Analysts Have Been Cutting Their Estimates
Sol-Gel Technologies Ltd. (NASDAQ:SLGL) defied analyst predictions to release its quarterly results, which were ahead of market expectations. Revenues were better than expected, with US$2.1m in sales some 16% ahead of forecasts. The company still lost a statutory US$0.37 per share, although the losses were 20% smaller than the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 Sol-Gel Technologies
Taking into account the latest results, the consensus forecast from Sol-Gel Technologies' four analysts is for revenues of US$27.3m in 2021, which would reflect a huge 154% improvement in sales compared to the last 12 months. Losses are forecast to balloon 28% to US$1.72 per share. Before this latest report, the consensus had been expecting revenues of US$32.1m and US$1.31 per share in losses. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.
The average price target was broadly unchanged at US$20.00, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Sol-Gel Technologies analyst has a price target of US$23.00 per share, while the most pessimistic values it at US$16.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Sol-Gel Technologies' growth to accelerate, with the forecast 154% growth ranking favourably alongside historical growth of 86% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Sol-Gel Technologies is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Sol-Gel Technologies going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for Sol-Gel Technologies you should be aware of.
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.
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