As you might know, Alector, Inc. (NASDAQ:ALEC) just kicked off its latest quarterly results with some very strong numbers. Results overall were solid, with revenues arriving 6.2% better than analyst forecasts at US$15m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.40 per share, were 6.2% smaller than the analysts expected. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from Alector's ten analysts is for revenues of US$62.9m in 2024. This would reflect a decent 14% increase on its revenue over the past 12 months. Losses are expected to increase substantially, hitting US$1.94 per share. Before this latest report, the consensus had been expecting revenues of US$63.6m and US$1.96 per share in losses.
The consensus price target was unchanged at US$16.88, suggesting that the business - losses and all - is executing in line with estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Alector, with the most bullish analyst valuing it at US$35.00 and the most bearish at US$9.00 per share. We would probably assign less value to the analyst 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 the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Alector's rate of growth is expected to accelerate meaningfully, with the forecast 30% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 25% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 23% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Alector is expected to grow much 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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$16.88, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Alector. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Alector analysts - going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - Alector has 3 warning signs we think you should be aware 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.