The analysts might have been a bit too bullish on Sangamo Therapeutics, Inc. (NASDAQ:SGMO), given that the company fell short of expectations when it released its quarterly results last week. It was not a great statutory result, with revenues coming in 96% lower than the analysts predicted. Unsurprisingly, earnings also fell seriously short of forecasts, turning into a per-share loss of US$0.18. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. 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 consensus forecast from Sangamo Therapeutics' five analysts is for revenues of US$27.1m in 2024. This reflects a huge 121% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 61% to US$0.46. Before this latest report, the consensus had been expecting revenues of US$30.4m and US$0.52 per share in losses. We can see there's definitely been a change in sentiment in this update, with the analysts administering a meaningful downgrade to next year's revenue estimates, while at the same time reducing their loss estimates.
The consensus price target rose 20% to US$3.80, with the analysts increasingly optimistic about shrinking losses, despite the expected decline in revenue. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Sangamo Therapeutics at US$8.00 per share, while the most bearish prices it at US$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.
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. The analysts are definitely expecting Sangamo Therapeutics' growth to accelerate, with the forecast 4x annualised growth to the end of 2024 ranking favourably alongside historical growth of 4.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 18% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Sangamo Therapeutics to grow faster than the wider 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 Sangamo Therapeutics' revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Still, earnings are more important to the intrinsic value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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. We have forecasts for Sangamo Therapeutics going out to 2026, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 4 warning signs for Sangamo Therapeutics you should be aware of, and 1 of them is significant.
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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.
