The analysts might have been a bit too bullish on Sutro Biopharma, Inc. (NASDAQ:STRO), given that the company fell short of expectations when it released its quarterly results last week. Revenues came in at US$9.8m, missing analyst expectations by 11%. Statutory losses per share fell slightly short, coming in at US$2.33, 6.2% below what the analysts had predicted. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Following the recent earnings report, the consensus from twelve analysts covering Sutro Biopharma is for revenues of US$44.4m in 2026. This implies a discernible 2.8% decline in revenue compared to the last 12 months. Losses are supposed to decline, shrinking 20% from last year to US$8.73. Before this earnings announcement, the analysts had been modelling revenues of US$43.9m and losses of US$8.60 per share in 2026.

The average price target fell 5.4% to US$50.33, with the ongoing losses seemingly a concern for the analysts, despite the lack of real change to the earnings forecasts. 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 Sutro Biopharma analyst has a price target of US$61.00 per share, while the most pessimistic values it at US$34.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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 revenue is expected to slow, with a forecast annualised decline of 5.6% by the end of 2026. This indicates a significant reduction from annual growth of 10.0% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 23% annually for the foreseeable future. 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 obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Sutro Biopharma's revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 Sutro Biopharma going out to 2028, and you can see them free on our platform here.

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.