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Shareholders of Arcus Biosciences, Inc. (NYSE:RCUS) will be pleased this week, given that the stock price is up 11% to US$35.26 following its latest full-year results. Revenues were a bright spot, with US$78m in sales arriving 2.0% ahead of expectations, although statutory earnings didn't fare nearly so well, recording a loss of US$2.24, some 4.0% below consensus predictions. 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.
Taking into account the latest results, the eight analysts covering Arcus Biosciences provided consensus estimates of US$61.9m revenue in 2021, which would reflect a painful 20% decline on its sales over the past 12 months. Losses are forecast to balloon 42% to US$3.18 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$56.6m and losses of US$3.20 per share in 2021.
The consensus price target held steady at US$53.60despite the upgrade to revenue forecasts and ongoing losses. The analysts seems to think the business is otherwise performing roughly in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Arcus Biosciences at US$70.00 per share, while the most bearish prices it at US$40.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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 20%, a significant reduction from annual growth of 104% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 19% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Arcus Biosciences 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. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse 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.
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 estimates - from multiple Arcus Biosciences analysts - going out to 2025, and you can see them free on our platform here.
Before you take the next step you should know about the 4 warning signs for Arcus Biosciences (1 doesn't sit too well with us!) that we have uncovered.
This article by Simply Wall St is general in nature. 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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