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Entrada Therapeutics, Inc. (NASDAQ:TRDA) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investors have been pretty optimistic on Entrada Therapeutics too, with the stock up 18% to US$16.53 over the past week. We'll be curious to see if these new estimates convince the market to lift the stock price higher still.
Following the upgrade, the consensus from four analysts covering Entrada Therapeutics is for revenues of US$175m in 2024, implying a concerning 27% decline in sales compared to the last 12 months. Statutory earnings per share are supposed to nosedive 88% to US$0.37 in the same period. Yet before this consensus update, the analysts had been forecasting revenues of US$144m and losses of US$0.29 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.
Check out our latest analysis for Entrada Therapeutics
Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$23.36, suggesting that the forecast performance does not have a long term impact on the company's valuation.
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. We would highlight that sales are expected to reverse, with a forecast 46% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 131% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 23% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Entrada Therapeutics is expected to lag the wider industry.
The Bottom Line
The most important thing to take away from this upgrade is that the consensus now expects Entrada Therapeutics to become profitable this year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower 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 Entrada Therapeutics could be a good candidate for more research.