T2 Biosystems, Inc. (NASDAQ:TTOO) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year’s forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance.
Following the upgrade, the latest consensus from T2 Biosystems’ four analysts is for revenues of US$42m in 2021, which would reflect a substantial 211% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 55% to US$0.24. Yet before this consensus update, the analysts had been forecasting revenues of US$36m and losses of US$0.30 per share in 2021. So there’s been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
Check out our latest analysis for T2 Biosystems
There was no major change to the consensus price target of US$3.15, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. 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 T2 Biosystems at US$4.00 per share, while the most bearish prices it at US$2.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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 T2 Biosystems’ rate of growth is expected to accelerate meaningfully, with the forecast 211% revenue growth noticeably faster than its historical growth of 27% p.a. over the past five years. 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 T2 Biosystems is expected to grow much faster than its industry.
The Bottom Line
The most important thing here is that analysts reduced their loss per share estimates for next year, reflecting increased optimism around T2 Biosystems’ prospects. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive – assuming these forecasts are met! So T2 Biosystems could be a good candidate for more research.
Analysts are clearly in love with T2 Biosystems at the moment, but before diving in – you should be aware that we’ve identified some warning flags with the business, such as a short cash runway. For more information, you can click through to our platform to learn more about this and the 2 other warning signs we’ve identified .
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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.
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