Earnings Update: T2 Biosystems, Inc. (NASDAQ:TTOO) Just Reported And Analysts Are Boosting Their Estimates
Shareholders might have noticed that T2 Biosystems, Inc. (NASDAQ:TTOO) filed its third-quarter result this time last week. The early response was not positive, with shares down 6.8% to US$1.23 in the past week. The business exceeded revenue expectations with sales of US$5.2m coming in 9.5% ahead of forecasts. Statutory losses were US$0.08 a share, in line with what the analysts predicted. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for T2 Biosystems
Taking into account the latest results, the current consensus from T2 Biosystems’ four analysts is for revenues of US$41.7m in 2021, which would reflect a huge 211% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 55% to US$0.24. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$36.4m and losses of US$0.30 per share in 2021. So there’s been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.
There was no major change to the consensus price target of US$3.15, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values T2 Biosystems at US$4.00 per share, while the most bearish prices it at US$2.50. This shows there is still a bit of diversity in estimates, but analysts don’t appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It’s clear from the latest estimates that T2 Biosystems’ rate of growth is expected to accelerate meaningfully, with the forecast 211% revenue growth noticeably faster than its historical growth of 27%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect T2 Biosystems to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$3.15, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for T2 Biosystems going out to 2022, and you can see them free on our platform here..
Don’t forget that there may still be risks. For instance, we’ve identified 4 warning signs for T2 Biosystems (2 can’t be ignored) you should be aware of.
This article by Simply Wall St is general in nature. 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.
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