Shareholders of Antibe Therapeutics Inc. (TSE:ATE) will be pleased this week, given that the stock price is up 11% to CA$0.40 following its latest second-quarter results. Revenues came in 42% better than analyst models expected, at CA$2.9m, although statutory losses ballooned 100% to CA$0.02, which is much worse than what was forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the five analysts covering Antibe Therapeutics are now predicting revenues of CA$9.58m in 2021. If met, this would reflect an okay 5.3% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 24% to CA$0.058. Yet prior to the latest earnings, the analysts had been forecasting revenues of CA$7.57m and losses of CA$0.052 per share in 2021. Ergo, there's been a clear change in sentiment, with the analysts lifting this year's revenue estimates, while at the same time increasing their loss per share numbers to reflect the cost of achieving this growth.
It will come as no surprise that expanding losses caused the consensus price target to fall 12% to CA$1.86with the analysts implicitly ranking ongoing losses as a greater concern than growing revenues. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Antibe Therapeutics analyst has a price target of CA$3.00 per share, while the most pessimistic values it at CA$1.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Antibe Therapeutics' revenue growth will slow down substantially, with revenues next year expected to grow 5.3%, compared to a historical growth rate of 10% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 31% next year. Factoring in the forecast slowdown in growth, it seems obvious that Antibe Therapeutics is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse 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 Antibe Therapeutics' future valuation.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Antibe Therapeutics going out to 2025, and you can see them free on our platform here..
You still need to take note of risks, for example - Antibe Therapeutics has 2 warning signs we think you should be aware of.
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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