TScan Therapeutics, Inc. (NASDAQ:TCRX) just released its second-quarter report and things are looking bullish. Revenues of US$4.1m beat estimates by a substantial 35% margin. Unfortunately, TScan Therapeutics also reported a statutory loss of US$0.63 per share, which at least was smaller than the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus from TScan Therapeutics' four analysts is for revenues of US$15.2m in 2022, which would reflect a major 23% increase on its sales over the past 12 months. Per-share losses are supposed to see a sharp uptick, reaching US$2.92. Before this earnings announcement, the analysts had been modelling revenues of US$12.8m and losses of US$3.08 per share in 2022. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.
Yet despite these upgrades, the analysts cut their price target 9.7% to US$14.00, implicitly signalling that the ongoing losses are likely to weigh negatively on TScan Therapeutics' valuation. 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. The most optimistic TScan Therapeutics analyst has a price target of US$21.00 per share, while the most pessimistic values it at US$6.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that TScan Therapeutics' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 52% growth on an annualised basis. This is compared to a historical growth rate of 107% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 15% per year. Even after the forecast slowdown in growth, it seems obvious that TScan Therapeutics is also expected to grow faster 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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of TScan Therapeutics' future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple TScan Therapeutics analysts - going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - TScan Therapeutics has 5 warning signs (and 1 which is significant) we think you should know about.
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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.
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