Shareholders in CytomX Therapeutics, Inc. (NASDAQ:CTMX) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects. CytomX Therapeutics has also found favour with investors, with the stock up an impressive 27% to US$14.24 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the upgrade, the latest consensus from CytomX Therapeutics' eight analysts is for revenues of US$90m in 2020, which would reflect a major 56% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 51% to US$1.11. Yet before this consensus update, the analysts had been forecasting revenues of US$81m and losses of US$1.64 per share in 2020. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
It will come as no surprise to learn that the analysts have increased their price target for CytomX Therapeutics 8.3% to US$14.40 on the back of these upgrades. 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. Currently, the most bullish analyst values CytomX Therapeutics at US$18.00 per share, while the most bearish prices it at US$7.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the CytomX Therapeutics' past performance and to peers in the same industry. The analysts are definitely expecting CytomX Therapeutics'growth to accelerate, with the forecast 56% growth ranking favourably alongside historical growth of 43% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 20% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect CytomX Therapeutics to grow faster than the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting CytomX Therapeutics is moving incrementally towards profitability. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at CytomX Therapeutics.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for CytomX Therapeutics going out to 2024, and you can see them free on our platform here..
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