Analysts Have Lowered Expectations For Arcellx, Inc. (NASDAQ:ACLX) After Its Latest Results

As you might know, Arcellx, Inc. (NASDAQ:ACLX) recently reported its quarterly numbers. Statutory losses were a bit smaller than expected, at just US$0.94 per share, even though revenues of US$7.6m missed analyst expectations by a shocking 46%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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After the latest results, the consensus from Arcellx's 16 analysts is for revenues of US$46.0m in 2025, which would reflect a not inconsiderable 19% decline in revenue compared to the last year of performance. Losses are forecast to balloon 21% to US$4.13 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$64.5m and losses of US$4.05 per share in 2025. There's been a definite change in sentiment in this update, 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 Arcellx

The average price target was broadly unchanged at US$114, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the 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. Currently, the most bullish analyst values Arcellx at US$134 per share, while the most bearish prices it at US$100.00. This is a very narrow spread of estimates, implying either that Arcellx is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 35% by the end of 2025. This indicates a significant reduction from annual growth of 61% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 19% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Arcellx is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$114, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Arcellx. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Arcellx analysts - going out to 2027, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Arcellx that you should be aware of.

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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.