SQZ Biotechnologies Company (NYSE:SQZ) came out with its full-year results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Results overall weren’t great; even though revenues of US$21m beat expectations by 16%, statutory losses ballooned to US$9.35 per share, substantially worse than the analysts had 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. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on SQZ Biotechnologies after the latest results.
Taking into account the latest results, SQZ Biotechnologies’ three analysts currently expect revenues in 2021 to be US$20.6m, approximately in line with the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 75% to US$2.38. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$25.1m and losses of US$2.26 per share in 2021. So there’s been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.
There was no major change to the consensus price target of US$36.67, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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 SQZ Biotechnologies at US$40.00 per share, while the most bearish prices it at US$35.00. The narrow spread of estimates could suggest that the business’ future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
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. We would highlight that sales are expected to reverse, with a forecast 1.9% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 4.4% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 18% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – SQZ Biotechnologies is expected to lag the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at SQZ Biotechnologies. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$36.67, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for SQZ Biotechnologies going out to 2025, and you can see them free on our platform here..
And what about risks? Every company has them, and we’ve spotted 3 warning signs for SQZ Biotechnologies (of which 1 is significant!) you should know about.
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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