Yahoo Finance Analysts Are Betting On Seres Therapeutics, Inc. (NASDAQ:MCRB) With A Big Upgrade This Week
Seres Therapeutics, Inc. (NASDAQ:MCRB) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline. The market may be pricing in some blue sky too, with the share price gaining 21% to US$4.98 in the last 7 days. Could this upgrade be enough to drive the stock even higher?
Following the latest upgrade, the eight analysts covering Seres Therapeutics provided consensus estimates of US$21m revenue in 2022, which would reflect a stressful 84% decline on its sales over the past 12 months. Losses are supposed to balloon 161% to US$2.17 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$18m and losses of US$2.33 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
Check out our latest analysis for Seres Therapeutics
The consensus price target fell 8.2%, to US$12.86, suggesting that the analysts remain pessimistic on the company, despite the improved earnings and revenue outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Seres Therapeutics, with the most bullish analyst valuing it at US$25.00 and the most bearish at US$4.00 per share. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 98% by the end of 2022. This indicates a significant reduction from annual growth of 38% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 14% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Seres Therapeutics is expected to lag the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Seres Therapeutics is moving incrementally towards profitability. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Seres Therapeutics.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Seres Therapeutics going out to 2024, and you can see them free on our platform here..
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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.
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