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One thing we could say about the analysts on Arcus Biosciences, Inc. (NYSE:RCUS) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.
Following the downgrade, the most recent consensus for Arcus Biosciences from its ten analysts is for revenues of US$142m in 2024 which, if met, would be a solid 18% increase on its sales over the past 12 months. Per-share losses are expected to see a sharp uptick, reaching US$4.38. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$171m and losses of US$4.04 per share in 2024. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.
See our latest analysis for Arcus Biosciences
The consensus price target was broadly unchanged at US$42.42, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.
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 Arcus Biosciences' revenue growth is expected to slow, with the forecast 14% annualised growth rate until the end of 2024 being well below the historical 46% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 15% annually. So it's pretty clear that, while Arcus Biosciences' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for next year. Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. 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 Arcus Biosciences after today.
Still, 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.