Analysts Have Been Trimming Their Fulgent Genetics, Inc. (NASDAQ:FLGT) Price Target After Its Latest Report

Fulgent Genetics, Inc. (NASDAQ:FLGT) just released its first-quarter report and things are looking bullish. The results overall were pretty good, with revenues of US$66m exceeding expectations and statutory losses coming in at justUS$0.52 per share, some 22% below what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Fulgent Genetics

Following the recent earnings report, the consensus from three analysts covering Fulgent Genetics is for revenues of US$255.4m in 2023, implying a stressful 30% decline in sales compared to the last 12 months. Losses are forecast to balloon 180% to US$2.44 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$250.2m and losses of US$2.46 per share in 2023.

The analysts trimmed their valuations, with the average price target falling 7.4% to US$41.67, with the ongoing losses clearly weighing on sentiment despite the upgraded revenue estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Fulgent Genetics analyst has a price target of US$45.00 per share, while the most pessimistic values it at US$35.00. This is a very narrow spread of estimates, implying either that Fulgent Genetics is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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 38% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 54% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.5% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Fulgent Genetics is expected to lag the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 forecasts for Fulgent Genetics going out to 2025, and you can see them free on our platform here.

We also provide an overview of the Fulgent Genetics Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.