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22nd Century Group, Inc. (NASDAQ:XXII) just released its quarterly report and things are looking bullish. Revenues and losses per share were both better than expected, with revenues of US$9.0m leading estimates by 9.4%. Statutory losses were smaller than the analystsexpected, coming in at US$0.05 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from 22nd Century Group's twin analysts is for revenues of US$37.3m in 2022, which would reflect a solid 12% increase on its sales over the past 12 months. The loss per share is expected to ameliorate slightly, reducing to US$0.21. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$39.0m and losses of US$0.30 per share in 2022. While the revenue estimates fell, sentiment seems to have improved, with the analysts making a considerable decrease in losses per share in particular.
There was a decent 38% increase in the price target to US$5.50, with the analysts clearly signalling that the expected reduction in losses is a positive, despite a weaker revenue outlook.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 17% growth on an annualised basis. That is in line with its 15% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 3.6% annually. So it's pretty clear that 22nd Century Group is forecast to grow substantially faster than its industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. They also downgraded their revenue estimates, although industry data suggests that 22nd Century Group's revenues are expected to grow faster than the wider industry. Still, earnings per share are more important to value creation for shareholders. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on 22nd Century Group. Long-term earnings power is much more important than next year's profits. We have analyst estimates for 22nd Century Group going out as far as 2024, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 3 warning signs for 22nd Century Group that you need to be mindful of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.