Compugen Ltd. (NASDAQ:CGEN) investors will be delighted, with the company turning in some strong numbers with its latest results. The results were impressive, with revenues of US$2.6m exceeding analyst forecasts by 111%, and statutory losses of US$0.08 were likewise much smaller than the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, Compugen's two analysts are now forecasting revenues of US$37.0m in 2024. This would be a satisfactory 2.8% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 73% to US$0.05. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$37.9m and losses of US$0.13 per share in 2024. Although the revenue estimates have fallen somewhat, Compugen'sfuture looks a little different to the past, with a very promising decrease in the loss per share forecasts in particular.
The consensus price target fell 6.2% to US$5.00, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Compugen's past performance and to peers in the same industry. We would highlight that Compugen's revenue growth is expected to slow, with the forecast 3.8% annualised growth rate until the end of 2024 being well below the historical 54% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 18% per year. 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 is that the analysts reconfirmed their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. With that said, earnings are more important to the long-term value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Compugen's future valuation.
Following on from that line of thought, we think that 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.
It is also worth noting that we have found 4 warning signs for Compugen (1 is a bit concerning!) that you need to take into consideration.
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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.