Editas Medicine, Inc. Just Reported Yearly Earnings: Have Analysts Changed Their Mind On The Stock?
It's been a sad week for Editas Medicine, Inc. (NASDAQ:EDIT), who've watched their investment drop 15% to US$20.98 in the week since the company reported its annual result. Statutory results overall were mixed, with revenues coming in 63% lower than analysts predicted. What's really surprising is that losses of US$2.68 per share were 44% smaller than analysts had predicted. Following the result, 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 thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Editas Medicine
Taking into account the latest results, the current consensus from Editas Medicine's eight analysts is for revenues of US$27.1m in 2020, which would reflect a sizeable 32% increase on its sales over the past 12 months. Statutory losses are expected to reduce, shrinking 18% from last year to US$3.16. Before this latest report, the consensus had been expecting revenues of US$24.9m and US$2.99 per share in losses. There's been a pretty noticeable increase in sentiment, with analysts upgrading revenues and making a earnings per share in particular
The consensus price target stayed unchanged at US$36.33, seeming to suggest that higher forecast losses are not expected to have a long term impact on the valuation. 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 Editas Medicine, with the most bullish analyst valuing it at US$55.00 and the most bearish at US$28.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
In addition, we can look to Editas Medicine's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. Next year brings more of the same, according to analysts, with revenue forecast to grow 32%, in line with its 39% annual growth over the past three years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 16% next year. So it's pretty clear that Editas Medicine is forecast to grow substantially faster than its market.
The Bottom Line
Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Still, 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 Editas Medicine going out to 2024, and you can see them free on our platform here..
You can also see our analysis of Editas Medicine's Board and CEO remuneration and experience, and whether company insiders have been buying stock.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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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