Earnings Miss: Arcellx, Inc. Missed EPS And Analysts Are Revising Their Forecasts

Investors in Arcellx, Inc. (NASDAQ:ACLX) had a good week, as its shares rose 6.9% to close at US$44.82 following the release of its quarterly results. It was a pretty bad result overall, with revenues coming in 80% lower than the analysts predicted. Statutory earnings correspondingly nosedived, with Arcellx reporting a loss of US$0.58 per share, where the analysts were expecting a profit. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Arcellx

Taking into account the latest results, the most recent consensus for Arcellx from seven analysts is for revenues of US$90.6m in 2023 which, if met, would be a sizeable 406% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 88% to US$0.47. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$107.4m and losses of US$0.47 per share in 2023. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to next year's revenue estimates, while at the same time holding losses per share steady.

The analysts lifted their price target 5.8% to US$44.78per share, with reduced revenue estimates seemingly not expected to have a long-term impact on the intrinsic value of the business. 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. Currently, the most bullish analyst values Arcellx at US$58.00 per share, while the most bearish prices it at US$35.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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. At Simply Wall St, we have a full range of analyst estimates for Arcellx going out to 2025, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Arcellx (1 is a bit unpleasant) 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.