Bicycle Therapeutics plc (NASDAQ:BCYC) defied analyst predictions to release its quarterly results, which were ahead of market expectations. Results clearly exceeded expectations, with a substantial revenue beat leading to smaller losses in what looks like a definite win for investors. Revenues were US$3.8m and the statutory loss per share was US$0.52, smaller than the analysts had forecast. 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. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the consensus from Bicycle Therapeutics’ six analysts is for revenues of US$5.30m in 2021, which would reflect a painful 55% decline in sales compared to the last year of performance. Losses are forecast to balloon 26% to US$2.61 per share. Before this earnings announcement, the analysts had been modelling revenues of US$8.31m and losses of US$2.77 per share in 2021. 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.
There was a decent 8.4% increase in the price target to US$27.71, with the analysts clearly signalling that the expected reduction in losses is a positive, despite a weaker revenue outlook. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Bicycle Therapeutics at US$35.00 per share, while the most bearish prices it at US$22.00. This shows there is still a bit of diversity in estimates, but analysts don’t appear to be totally split on the stock as though it might be a success or failure situation.
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. We would highlight that sales are expected to reverse, with the forecast 55% revenue decline a notable change from historical growth of 31% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 20% next year. It’s pretty clear that Bicycle Therapeutics’ revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, long term profitability is more important for the value creation process. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Bicycle Therapeutics going out to 2024, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for Bicycle Therapeutics (1 shouldn’t be ignored!) that we have uncovered.
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.