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The analysts covering Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the downgrade, the most recent consensus for Arcturus Therapeutics Holdings from its ten analysts is for revenues of US$97m in 2021 which, if met, would be a sizeable increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 59% to US$1.22. Before this latest update, the analysts had been forecasting revenues of US$189m and earnings per share (EPS) of US$0.12 in 2021. There looks to have been a major change in sentiment regarding Arcturus Therapeutics Holdings' prospects, with a sizeable cut to revenues and the analysts now forecasting a loss instead of a profit.
Check out our latest analysis for Arcturus Therapeutics Holdings
The consensus price target fell 8.1% to US$103, implicitly signalling that lower earnings per share are a leading indicator for Arcturus Therapeutics Holdings' valuation. 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. There are some variant perceptions on Arcturus Therapeutics Holdings, with the most bullish analyst valuing it at US$172 and the most bearish at US$68.00 per share. With such a wide range in price targets, the analysts are almost certainly betting on widely diverse outcomes for the underlying business. 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.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Arcturus Therapeutics Holdings' growth to accelerate, with the forecast 8x growth ranking favourably alongside historical growth of 9.6% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 21% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Arcturus Therapeutics Holdings to grow faster than the wider industry.