Analysts Are Upgrading Fulcrum Therapeutics, Inc. (NASDAQ:FULC) After Its Latest Results

By
Simply Wall St
Published
August 11, 2021
NasdaqGM:FULC
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Fulcrum Therapeutics, Inc. (NASDAQ:FULC) investors will be delighted, with the company turning in some strong numbers with its latest results. Revenues of US$4.4m beat estimates by a substantial 129% margin. Unfortunately, Fulcrum Therapeutics also reported a statutory loss of US$0.60 per share, which at least was smaller than the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Fulcrum Therapeutics

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NasdaqGM:FULC Earnings and Revenue Growth August 12th 2021

Following the recent earnings report, the consensus from seven analysts covering Fulcrum Therapeutics is for revenues of US$13.2m in 2021, implying a chunky 14% decline in sales compared to the last 12 months. Losses are expected to hold steady at around US$2.47. Before this latest report, the consensus had been expecting revenues of US$9.70m and US$2.63 per share in losses. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

It will come as no surprise to learn thatthe analysts have increased their price target for Fulcrum Therapeutics 27% to US$26.29on the back of these upgrades. 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. The most optimistic Fulcrum Therapeutics analyst has a price target of US$45.00 per share, while the most pessimistic values it at US$11.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 25% annualised revenue decline to the end of 2021. That is a notable change from historical growth of 454% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.6% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Fulcrum Therapeutics is expected to lag 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. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse 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.

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 Fulcrum Therapeutics analysts - going out to 2023, and you can see them free on our platform here.

It is also worth noting that we have found 4 warning signs for Fulcrum Therapeutics (1 can't be ignored!) that you need to take into consideration.

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