As you might know, Precision BioSciences, Inc. (NASDAQ:DTIL) just kicked off its latest third-quarter results with some very strong numbers. Sales crushed expectations at US$7.4m, beating expectations by 97%. Precision BioSciences reported a statutory loss of US$0.50 per share, which - although not amazing - was much smaller than the analysts predicted. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the five analysts covering Precision BioSciences are now predicting revenues of US$45.8m in 2021. If met, this would reflect a substantial 109% improvement in sales compared to the last 12 months. Losses are expected to hold steady at around US$2.06. Before this earnings announcement, the analysts had been modelling revenues of US$43.3m and losses of US$2.18 per share in 2021. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrades to both revenue and loss per share forecasts for next year.
The consensus price target fell 10.0%, to US$17.33, suggesting that the analysts remain pessimistic on the company, despite the improved earnings and revenue outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Precision BioSciences at US$25.00 per share, while the most bearish prices it at US$6.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Precision BioSciences' growth to accelerate, with the forecast 109% growth ranking favourably alongside historical growth of 41% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Precision BioSciences is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Precision BioSciences' future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Precision BioSciences. Long-term earnings power is much more important than next year's profits. We have forecasts for Precision BioSciences going out to 2024, and you can see them free on our platform here.
Even so, be aware that Precision BioSciences is showing 5 warning signs in our investment analysis , and 2 of those are a bit unpleasant...
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