Seagen Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
A week ago, Seagen Inc. (NASDAQ:SGEN) came out with a strong set of third-quarter numbers that could potentially lead to a re-rate of the stock. Statutory earnings performance was extremely strong, with revenue of US$1.1b beating expectations by 118% and earnings per share (EPS) of US$3.50, an impressive 1,379%ahead of expectations. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Check out our latest analysis for Seagen
Taking into account the latest results, the 19 analysts covering Seagen provided consensus estimates of US$1.81b revenue in 2021, which would reflect a perceptible 3.1% decline on its sales over the past 12 months. The company is forecast to report a statutory loss of US$0.048 in 2021, a sharp decline from a profit over the last year. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.82b and earnings per share (EPS) of US$0.12 in 2021. While the analysts have made no real change to their revenue estimates, we can see that the consensus is now modelling a loss next year – a clear dip in sentiment compared to the previous outlook of a profit.
The consensus price target held steady at US$198, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company’s valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Seagen at US$254 per share, while the most bearish prices it at US$138. 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.
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 revenue decline of 3.1%, a significant reduction from annual growth of 30% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 21% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – Seagen is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts are expecting Seagen to become unprofitable next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Seagen’s revenues are expected to perform worse than the wider industry. 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.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have estimates – from multiple Seagen analysts – going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we’ve discovered 2 warning signs for Seagen that 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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