Foghorn Therapeutics Inc. (NASDAQ:FHTX) Just Released Its Third-Quarter Earnings: Here's What Analysts Think

Foghorn Therapeutics Inc. (NASDAQ:FHTX) just released its third-quarter report and things are looking bullish. Foghorn Therapeutics outperformed estimates, with revenues of US$7.8m beating estimates by 11%. Statutory losses were US$0.31, 30% smaller thanthe analysts expected. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Foghorn Therapeutics

Taking into account the latest results, the most recent consensus for Foghorn Therapeutics from eight analysts is for revenues of US$34.1m in 2025. If met, it would imply a sizeable 34% increase on its revenue over the past 12 months. Losses are expected to be contained, narrowing 14% from last year to US$1.41. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$34.9m and losses of US$1.51 per share in 2025. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for next year.

There was no major change to the US$16.00average price target, suggesting that the adjustments to revenue and earnings are not expected to have a long-term impact on 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 Foghorn Therapeutics at US$20.00 per share, while the most bearish prices it at US$9.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. It's pretty clear that there is an expectation that Foghorn Therapeutics' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 26% growth on an annualised basis. This is compared to a historical growth rate of 67% over the past five years. Compare this to the 561 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 21% per year. So it's pretty clear that, while Foghorn Therapeutics' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. Even so, long term profitability is more important for the value creation process. The consensus price target held steady at US$16.00, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Foghorn Therapeutics analysts - going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 5 warning signs for Foghorn Therapeutics (2 make us uncomfortable) 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.