The latest analyst coverage could presage a bad day for Sesen Bio, Inc. (NASDAQ:SESN), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the consensus from three analysts covering Sesen Bio is for revenues of US$10m in 2021, implying a considerable 11% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$15m in 2021. The consensus view seems to have become more pessimistic on Sesen Bio, noting the sizeable cut to revenue estimates in this update.NasdaqGM:SESN Earnings and Revenue Growth February 24th 2021
Additionally, the consensus price target for Sesen Bio increased 105% to US$7.00, showing a clear increase in optimism from the analysts involved. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Sesen Bio, with the most bullish analyst valuing it at US$8.00 and the most bearish at US$6.00 per share. This is a very narrow spread of estimates, implying either that Sesen Bio is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Sesen Bio's past performance and to peers in the same industry. One more thing stood out to us about these estimates, and it's the idea that Sesen Bio's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 8.9% to the end of 2021. This tops off a historical decline of 5.8% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 20% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Sesen Bio to suffer worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for next year. They're also anticipating slower revenue growth than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given the stark change in sentiment, we'd understand if investors became more cautious on Sesen Bio after today.
So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Sesen Bio, including a short cash runway. For more information, you can click here to discover this and the 2 other warning signs we've identified.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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In This StorySESN
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