The analysts might have been a bit too bullish on Frequency Therapeutics, Inc. (NASDAQ:FREQ), given that the company fell short of expectations when it released its annual results last week. It definitely looks like a negative result overall with revenues falling 11% short of analyst estimates at US$29m. Statutory losses were US$2.29 per share, 134% bigger than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Frequency Therapeutics

Taking into account the latest results, the three analysts covering Frequency Therapeutics provided consensus estimates of US$23.4m revenue in 2020, which would reflect an uneasy 19% decline 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$1.02. Before this earnings announcement, the analysts had been modelling revenues of US$28.8m and losses of US$0.69 per share in 2020. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The analysts lifted their price target 5.4% to US$29.50, implicitly signalling that lower earnings per share are not expected to have a longer-term impact on the stock's value. 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 Frequency Therapeutics at US$31.00 per share, while the most bearish prices it at US$28.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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. We have forecasts for Frequency Therapeutics going out to 2024, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Frequency Therapeutics .

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