Time To Worry? Analysts Just Downgraded Their Fulcrum Therapeutics, Inc. (NASDAQ:FULC) Outlook
Today is shaping up negative for Fulcrum Therapeutics, Inc. (NASDAQ:FULC) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
After the downgrade, the consensus from Fulcrum Therapeutics' eight analysts is for revenues of US$9.2m in 2022, which would reflect a disturbing 36% decline in sales compared to the last year of performance. Losses are supposed to balloon 30% to US$2.68 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$11m and losses of US$2.64 per share in 2022. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to this year's revenue estimates, while at the same time holding losses per share steady.
Check out our latest analysis for Fulcrum Therapeutics
There was no real change to the consensus price target of US$27.75, suggesting that the revisions to revenue estimates are not expected to have a long-term impact on Fulcrum Therapeutics' valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Fulcrum Therapeutics, with the most bullish analyst valuing it at US$43.00 and the most bearish at US$7.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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 a forecast 59% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 84% 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 3.6% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Fulcrum Therapeutics is expected to lag the wider industry.
The Bottom Line
Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Fulcrum Therapeutics' revenues are expected to grow slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Fulcrum Therapeutics after today.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Fulcrum Therapeutics' financials, such as dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other flags we've identified.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
