Investors in Seattle Genetics, Inc. (NASDAQ:SGEN) had a good week, as its shares rose 8.3% to close at US$117 following the release of its full-year results. The results don't look great, especially considering that statutory losses grew 40% toUS$0.96 per share. Revenues of US$917m did beat expectations by 8.4%, but it looks like a bit of a cold comfort. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Seattle Genetics from 19 analysts is for revenues of US$940.0m in 2020, which is an okay 2.5% increase on its sales over the past 12 months. The statutory loss per share is expected to greatly reduce in the near future, narrowing 230% to US$3.16. Before this earnings announcement, analysts had been forecasting revenues of US$1.09b and losses of US$0.89 per share in 2020. It looks like analyst sentiment has declined substantially in the aftermath of these results, with a real cut to revenue estimates and a large cut to consensus earnings per share numbers as well.
There was no major change to the consensus price target of US$121, 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. There are some variant perceptions on Seattle Genetics, with the most bullish analyst valuing it at US$140 and the most bearish at US$95.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Seattle Genetics's past performance and to peers in the same market. It's pretty clear that analysts expect Seattle Genetics's revenue growth will slow down substantially, with revenues next year expected to grow 2.5%, compared to a historical growth rate of 22% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 17% next year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Seattle Genetics.
The Bottom Line
The most important thing to take away is that analysts reduced their loss per share estimates for next year, perhaps highlighting increased optimism around Seattle Genetics's prospects. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at US$121, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Seattle Genetics going out to 2024, 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.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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