US$4.33: That's What Analysts Think Lineage Cell Therapeutics, Inc. Is Worth After Its Latest Results
Last week, you might have seen that Lineage Cell Therapeutics, Inc. (NYSEMKT:LCTX) released its third-quarter result to the market. The early response was not positive, with shares down 4.9% to US$0.80 in the past week. Revenues came in at US$567k, a whole 30% below what analysts were forecasting. Losses were a (relative) bright spot by comparison, with a per-share loss of US$0.11 substantially smaller than what analysts had expected. 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 forecasts to see whether analysts have changed their mind on Lineage Cell Therapeutics after the latest results.
Check out our latest analysis for Lineage Cell Therapeutics
Taking into account the latest results, the latest consensus from Lineage Cell Therapeutics's three analysts is for revenues of US$4.05m in 2020, which would reflect a huge 34% improvement in sales compared to the last 12 months. Losses are forecast to balloon 32% to US$0.25 per share. Before this earnings announcement, analysts had been forecasting revenues of US$4.19m and losses of US$0.23 per share in 2020. Analysts seem less optimistic after the recent results, reducing their sales forecasts and making a real cut to earnings per share forecasts.
The average analyst price target fell 8.8% to US$4.33, implicitly signalling that lower earnings per share are a leading indicator for Lineage Cell Therapeutics's valuation. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Lineage Cell Therapeutics analyst has a price target of US$6.00 per share, while the most pessimistic values it at US$3.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that analysts are forecasting Lineage Cell Therapeutics to grow faster in the future than it has in the past, with revenues expected to grow 34%. If achieved, this would be a much better result than the 10% annual decline over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 18% next year. So it looks like Lineage Cell Therapeutics is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses next year, perhaps suggesting Lineage Cell Therapeutics is moving incrementally towards profitability. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Lineage Cell Therapeutics going out to 2023, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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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. Thank you for reading.
