Compugen Ltd. (NASDAQ:CGEN) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.
Following the upgrade, the current consensus from Compugen's dual analysts is for revenues of US$45m in 2024 which - if met - would reflect a reasonable 5.0% increase on its sales over the past 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of US$0.04 per share this year. Yet before this consensus update, the analysts had been forecasting revenues of US$37m and losses of US$0.05 per share in 2024. So we can see that this has sparked a pretty clear upgrade to expectations, with higher revenues anticipated to lead to profit sooner than previously forecast.
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. It's pretty clear that there is an expectation that Compugen's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 10% growth on an annualised basis. This is compared to a historical growth rate of 66% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 18% annually. Factoring in the forecast slowdown in growth, it seems obvious that Compugen is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away from this upgrade is that the consensus now expects Compugen to become profitable this year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. The clear improvement in sentiment should be enough to get most shareholders feeling more optimistic about Compugen's future.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.
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 with high insider ownership.
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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.
