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Alector, Inc. (NASDAQ:ALEC) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.
After this upgrade, Alector's seven analysts are now forecasting revenues of US$45m in 2021. This would be a major 152% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$36m in 2021. The consensus has definitely become more optimistic, showing a very substantial lift in revenue forecasts.
Check out our latest analysis for Alector
Additionally, the consensus price target for Alector increased 8.1% to US$40.25, showing a clear increase in optimism from the analysts involved. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Alector analyst has a price target of US$57.00 per share, while the most pessimistic values it at US$29.00. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Alector's rate of growth is expected to accelerate meaningfully, with the forecast 242% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 4.7% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Alector to grow faster than the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that analysts lifted their revenue estimates for this year. They're also forecasting more rapid revenue growth than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Alector.