Poseida Therapeutics, Inc. (NASDAQ:PSTX) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market may be pricing in some blue sky too, with the share price gaining 65% to US$2.73 in the last 7 days. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the latest upgrade, the five analysts covering Poseida Therapeutics provided consensus estimates of US$60m revenue in 2023, which would reflect a concerning 62% decline on its sales over the past 12 months. Losses are supposed to balloon 382% to US$1.48 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$56m and losses of US$1.75 per share in 2023. So it seems there's been a definite increase in optimism about Poseida Therapeutics' future following the latest consensus numbers, with a cut to the loss per share forecasts in particular.
Yet despite these upgrades, the analysts cut their price target 12% to US$11.80, implicitly signalling that the ongoing losses are likely to weigh negatively on Poseida Therapeutics' valuation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 85% by the end of 2023. This indicates a significant reduction from annual growth of 87% 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 15% per year. It's pretty clear that Poseida Therapeutics' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Poseida Therapeutics is moving incrementally towards profitability. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. A lower price target is not intuitively what we would expect from a company whose business prospects are improving - at least judging by these forecasts - but if the underlying fundamentals are strong, Poseida Therapeutics could be one for the watch list.
Analysts are definitely bullish on Poseida Therapeutics, but no company is perfect. Indeed, you should know that there are several potential concerns to be aware of, including dilutive stock issuance over the past year. For more information, you can click through to our platform to learn more about this and the 2 other flags we've identified .
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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