It’s been a good week for Sage Therapeutics, Inc. (NASDAQ:SAGE) shareholders, because the company has just released its latest third-quarter results, and the shares gained 6.4% to US$78.06. It wasn’t the greatest result, with ongoing losses and revenues of US$1.6m falling short of analyst predictions. The losses were a relative bright spot though, with a statutory per-share loss of US$2.03 being 14% smaller than the analysts forecast. 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 Sage Therapeutics’ 20 analysts is for revenues of US$18.4m in 2021, which would reflect a major 164% increase on its sales over the past 12 months. Losses are expected to be contained, narrowing 13% from last year to US$9.04. Before this earnings announcement, the analysts had been modelling revenues of US$19.4m and losses of US$9.25 per share in 2021. It looks like there’s been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers fell somewhat.
The consensus price target rose 13% to US$92.65, with the analysts increasingly optimistic about shrinking losses, despite the expected decline in sales. 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 Sage Therapeutics at US$190 per share, while the most bearish prices it at US$35.00. 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. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Sage Therapeutics’ past performance and to peers in the same industry. The analysts are definitely expecting Sage Therapeutics’ growth to accelerate, with the forecast 164% growth ranking favourably alongside historical growth of 34% per annum over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 21% per year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Sage Therapeutics is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that Sage Therapeutics’ revenues are expected to grow faster than the wider industry. Even so, 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.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Sage Therapeutics going out to 2024, and you can see them free on our platform here..
Plus, you should also learn about the 2 warning signs we’ve spotted with Sage Therapeutics .
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.