The latest analyst coverage could presage a bad day for Arcus Biosciences, Inc. (NYSE:RCUS), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
After this downgrade, Arcus Biosciences' ten analysts are now forecasting revenues of US$142m in 2024. This would be a notable 18% improvement in sales compared to the last 12 months. Losses are expected to increase substantially, hitting US$4.38 per share. 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.
View 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.
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. It's pretty clear that there is an expectation that Arcus Biosciences' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 14% growth on an annualised basis. This is compared to a historical growth rate of 46% over the past 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. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Arcus Biosciences going forwards.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Arcus Biosciences going out to 2025, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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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.
