Foghorn Therapeutics Inc. (NASDAQ:FHTX) Just Reported, And Analysts Assigned A US$11.67 Price Target

Foghorn Therapeutics Inc. (NASDAQ:FHTX) shareholders are probably feeling a little disappointed, since its shares fell 2.1% to US$5.98 in the week after its latest quarterly results. Revenues came in at US$5.1m, a whole 31% below what the analysts were forecasting. Losses were a (relative) bright spot by comparison, with a per-share (statutory) loss of US$0.59 substantially smaller than what was 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Foghorn Therapeutics

After the latest results, the consensus from Foghorn Therapeutics' five analysts is for revenues of US$24.2m in 2024, which would reflect a sizeable 29% decline in revenue compared to the last year of performance. Losses are forecast to narrow 8.1% to US$2.01 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$35.3m and losses of US$4.04 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue forecasts while also reducing the estimated losses the business will incur.

The consensus price target fell 18% to US$11.67, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Foghorn Therapeutics at US$16.00 per share, while the most bearish prices it at US$6.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 36% by the end of 2024. This indicates a significant reduction from annual growth of 87% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 18% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Foghorn Therapeutics is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed 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. Even so, earnings are more important to the intrinsic value of the business. 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 Foghorn Therapeutics going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with Foghorn Therapeutics (at least 1 which is concerning) , and understanding them should be part of your investment process.

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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.