Sutro Biopharma, Inc.( NASDAQ:STRO ) just released its latest first-quarter results and things are looking bullish. Results clearly exceeded expectations, with a substantial revenue beat leading to smaller losses in what looks like a definite win for investors. Revenues were US$15m and the statutory loss per share was US$2.94, smaller than the analysts had forecast. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the recent earnings report, the consensus from eleven analysts covering Sutro Biopharma is for revenues of US$41.4m in 2026. This implies a concerning 58% decline in revenue compared to the last 12 months. Losses are expected to hold steady at around US$9.12. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$32.4m and losses of US$8.14 per share in 2026. 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.
View our latest analysis for Sutro Biopharma
It will come as a surprise to learn that the consensus price target rose 32% to US$47.10, with the analysts clearly more interested in growing revenue, even as losses intensify. 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 Sutro Biopharma at US$61.00 per share, while the most bearish prices it at US$9.00. 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. 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 69% annualised decline to the end of 2026. That is a notable change from historical growth of 15% 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 22% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Sutro Biopharma is expected to lag the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Sutro Biopharma. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to 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.
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 Sutro Biopharma going out to 2028, and you can see them free on our platform here. .
You still need to take note of risks, for example - Sutro Biopharma has 4 warning signs (and 3 which are potentially serious) we think you should know about.
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