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The analysts covering AC Immune SA (NASDAQ:ACIU) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. Bidders are definitely seeing a different story, with the stock price of CHF7.51 reflecting a 18% rise in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.
Following the latest downgrade, the three analysts covering AC Immune provided consensus estimates of CHF9.4m revenue in 2020, which would reflect a concerning 92% decline on its sales over the past 12 months. After this downgrade, the company is anticipated to report a loss of CHF0.88 in 2020, a sharp decline from a profit over the last year. Yet prior to the latest estimates, the analysts had been forecasting revenues of CHF23m and losses of CHF0.80 per share in 2020. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
View our latest analysis for AC Immune
The consensus price target was broadly unchanged at CHF12.13, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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. Currently, the most bullish analyst values AC Immune at CHF17.49 per share, while the most bearish prices it at CHF7.86. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the AC Immune's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 92%, a significant reduction from annual growth of 20% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 15% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - AC Immune is expected to lag the wider industry.