Editas Medicine, Inc. (NASDAQ:EDIT) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. In addition to smashing expectations with revenues of US$63m, Editas Medicine delivered a surprise statutory profit of US$0.12 per share, a notable improvement compared to analyst expectations of a loss. 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. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Editas Medicine after the latest results.
Check out our latest analysis for Editas Medicine
Following the recent earnings report, the consensus from seven analysts covering Editas Medicine is for revenues of US$22.2m in 2021, implying a concerning 32% decline in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$3.29 per share. Before this latest report, the consensus had been expecting revenues of US$23.8m and US$3.39 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for next year.
The consensus price target fell 8.7% to US$38.11, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. 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 Editas Medicine at US$60.00 per share, while the most bearish prices it at US$14.00. So we wouldn’t be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 32%, a significant reduction from annual growth of 42% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 20% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – Editas Medicine is expected to lag 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. Unfortunately,
Editas Medicine, Inc. (NASDAQ:EDIT) came out with its third-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues beat expectations by 889%, and sales of US$63m were sufficient to generate a statutory profit of US$0.12 – a pleasant surprise given that the analysts were forecasting a loss! Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year. NasdaqGS:EDIT Earnings and Revenue Growth November 7th 2020
Taking into account the latest results, the seven analysts covering Editas Medicine provided consensus estimates of US$22.2m revenue in 2021, which would reflect a painful 32% decline on its sales over the past 12 months. Losses are forecast to balloon 32% to US$3.29 per share. Before this earnings announcement, the analysts had been modelling revenues of US$23.8m and losses of US$3.39 per share in 2021. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for next year.
The consensus price target fell 8.7% to US$38.11, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. 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 Editas Medicine analyst has a price target of US$60.00 per share, while the most pessimistic values it at US$14.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
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 the forecast 32% revenue decline a notable change from historical growth of 42% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 20% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – Editas Medicine is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Unfortunately, they
Editas Medicine (EDIT) came out with quarterly earnings of $0.12 per share, beating the Zacks Consensus Estimate of a loss of $0.66 per share. This compares to loss of $0.66 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of 118.18%. A quarter ago, it was expected that this genome editing company would post a loss of $0.80 per share when it actually produced a loss of $0.43, delivering a surprise of 46.25%.
Over the last four quarters, the company has surpassed consensus EPS estimates three times.
Editas, which belongs to the Zacks Medical – Biomedical and Genetics industry, posted revenues of $62.84 million for the quarter ended September 2020, surpassing the Zacks Consensus Estimate by 759.42%. This compares to year-ago revenues of $3.85 million. The company has topped consensus revenue estimates two times over the last four quarters.
The sustainability of the stock’s immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.
Editas shares have added about 2.8% since the beginning of the year versus the S&P 500’s gain of 6.6%.
What’s Next for Editas?
While Editas has underperformed the market so far this year, the question that comes to investors’ minds is: what’s next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company’s earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for Editas was mixed. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.89 on $6.57 million in revenues for the coming quarter and -$2.67 on $29.49 million in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical – Biomedical and Genetics is currently in the bottom 26% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform
An effort to calculate whether those events have increased the spread of the coronavirus in the United States suggests that “contagious” and “deadly” would also apply.
A rigorous attempt to gauge the after-effects of 18 of the president’s reelection rallies, all held in the midst of the COVID-19 pandemic, suggests they have led to more than 30,000 additional cases and at least 700 additional deaths.
Those casualties would not have occurred if the campaign events had not taken place, according to a team of Stanford researchers. Media coverage of the rallies made clear there was little effort to follow guidelines about social distancing, and mask use was optional for attendees, who typically numbered in the thousands. (Indeed, face coverings were disparaged by the president on several occasions.)
Furthermore, the extra illnesses and deaths almost certainly reached beyond the ardent Trump supporters who attended the rallies, rippling outward to ensnare others in their towns and cities, the study authors said.
“The communities in which Trump rallies took place paid a high price in terms of disease and death,” the Stanford team concluded.
The study, led by economist B. Douglas Bernheim, was posted Friday on a website where social science researchers share preliminary work and seek feedback from other scholars.
On Saturday, the findings became fresh campaign fodder as the president stumped at four outdoor rallies in Pennsylvania and his Democratic challenger, Joe Biden, held two drive-in events in Michigan with former President Barack Obama.
Biden spokesman Andrew Gates said the study supports Democrats’ long-standing charge that Trump’s gatherings have been “super-spreader rallies that only serve his own ego.”
The Trump campaign contends that attendees are exercising their 1st Amendment rights. They are required to submit to temperature checks and are given masks and hand sanitizer upon entering, according to campaign spokeswoman Courtney Parella.
“We take strong precautions for our campaign events,” Parella told Politico.
In a bid to determine whether the Trump assemblies really have served as super-spreading events, Bernheim and his colleagues focused on 18 rallies held between June 20 and Sept. 22. Three of those events were held indoors, further increasing the risk of coronavirus transmission.
In an interview, Bernheim made clear that patterns of coronavirus infection vary widely from county to county. But after using an array of statistical methods to make apples-to-apples comparisons, he said the pattern was impossible to ignore: The mass gatherings likely set off chains of transmission that were long and random.
The researchers traced the effects of those chains for up to 10 weeks following each event. During that time, an infected rallygoer might pass the virus to her grocer, who may pass it to
San Francisco has become the poster child for how to control coronavirus cases and deaths amid the pandemic, with its residents wearing masks, businesses and schools reopening slowly and scientists and politicians working together to create public health orders.
The result of the county and city’s vigilant behavior has been the lowest death rate of any major city in the country and remarkably low cases rates considering S.F. is a densely populated city.… Read More
A Harvard researcher who looked at the life expectancy of 200,000 Americans who have died from the coronavirus estimates COVID-19 has cost the United States 2.5 million years of life.
The researcher, molecular biologist and geneticist Stephen Elledge, is the Gregor Mendel Professor of Genetics at Harvard Medical School and Brigham and Women’s Hospital, both located in Boston, USA Today reported.
Elledge arrived at his findings by estimating the remaining years of life those 200,000 COVID-19 victims likely had. He found that many of those who died were in middle age, and not elderly.
“It was really pretty shocking,” Elledge told USA Today, adding, “the younger half of that population are losing just as much life as the old people. And they really need to know it.”
The genetics professor said many of those killed by the disease could have lived decades more if not for the pandemic.
“Someone who dies in their 50s, for example, loses two to three decades of life expectancy,” said Elledge. He also said COVID-19 may have lasting effects on patients post-infection, and that its effects on young people later in their lives is unknown.
“You’re pushing your age forward,” he said. “All the people who make it through, who knows what’s going to happen to them when they get older.”
Elledge’s work typically encompasses DNA studies, though he wrote up his ideas about cumulative lost years due to COVID-19 deaths using simple calculations in an online report.
He said his findings were aligned with calculations he conducted earlier in the pandemic, adding that he is seeking to get them published in a peer-reviewed scientific journal soon.