Earnings Update: Solid Biosciences Inc. (NASDAQ:SLDB) Just Reported Its Second-Quarter Results And Analysts Are Updating Their Forecasts

·3 min read

Investors in Solid Biosciences Inc. (NASDAQ:SLDB) had a good week, as its shares rose 5.5% to close at US$0.80 following the release of its quarterly results. Revenues came in at US$6.2m, an impressive 127% ahead of analyst forecasts. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Solid Biosciences

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Taking into account the latest results, the current consensus, from the five analysts covering Solid Biosciences, is for revenues of US$11.2m in 2022, which would reflect a painful 24% reduction in Solid Biosciences' sales over the past 12 months. Losses are expected to increase substantially, hitting US$0.88 per share. Before this latest report, the consensus had been expecting revenues of US$8.76m and US$0.80 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts lifting this year's revenue estimates, while at the same time increasing their loss per share numbers to reflect the cost of achieving this growth.

The consensus price target stayed unchanged at US$5.40, seeming to suggest that higher forecast losses are not expected to have a long term impact on the valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Solid Biosciences analyst has a price target of US$12.00 per share, while the most pessimistic values it at US$2.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on 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 Solid Biosciences' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 42% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 92% 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 15% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Solid Biosciences is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Solid Biosciences going out to 2024, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 4 warning signs for Solid Biosciences you should be aware of, and 1 of them doesn't sit too well with us.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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