Arcutis Biotherapeutics, Inc. (NASDAQ:ARQT) Just Reported Yearly Earnings And Analysts Are Lifting Their Estimates

As you might know, Arcutis Biotherapeutics, Inc. (NASDAQ:ARQT) just kicked off its latest annual results with some very strong numbers. It looks like a positive result overall, with revenues of US$60m beating forecasts by 3.7%. Statutory losses of US$3.78 per share were 3.7% smaller than the analysts expected, likely helped along by the higher revenues. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Arcutis Biotherapeutics after the latest results.

Check out our latest analysis for Arcutis Biotherapeutics

Following the latest results, Arcutis Biotherapeutics' six analysts are now forecasting revenues of US$106.3m in 2024. This would be a sizeable 78% improvement in revenue compared to the last 12 months. Losses are expected to hold steady at around US$2.35. Before this latest report, the consensus had been expecting revenues of US$85.7m and US$2.38 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts noticeably increasing their revenue forecasts while also expecting losses per share to hold steady.

The analysts increased their price target 50% to US$18.00, perhaps signalling that higher revenues are a strong leading indicator for Arcutis Biotherapeutics's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Arcutis Biotherapeutics analyst has a price target of US$26.00 per share, while the most pessimistic values it at US$11.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Arcutis Biotherapeutics' revenue growth is expected to slow, with the forecast 78% annualised growth rate until the end of 2024 being well below the historical 100% 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) 17% per year. Even after the forecast slowdown in growth, it seems obvious that Arcutis Biotherapeutics is also expected to grow faster than 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. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 estimates - from multiple Arcutis Biotherapeutics analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Arcutis Biotherapeutics has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.