Newsflash: Fulcrum Therapeutics, Inc. (NASDAQ:FULC) Analysts Have Been Trimming Their Revenue Forecasts

Today is shaping up negative for Fulcrum Therapeutics, Inc. (NASDAQ:FULC) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the consensus from eight analysts covering Fulcrum Therapeutics is for revenues of US$9.8m in 2022, implying a substantial 32% decline in sales compared to the last 12 months. Per-share losses are expected to creep up to US$2.72. However, before this estimates update, the consensus had been expecting revenues of US$11m and US$2.64 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

See our latest analysis for Fulcrum Therapeutics

The consensus price target was broadly unchanged at US$27.75, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the 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. Currently, the most bullish analyst values Fulcrum Therapeutics at US$43.00 per share, while the most bearish prices it at US$7.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Fulcrum Therapeutics' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 54% by the end of 2022. This indicates a significant reduction from annual growth of 84% 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 3.5% per year. It's pretty clear that Fulcrum Therapeutics' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Fulcrum Therapeutics. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Fulcrum Therapeutics' revenues are expected to grow slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Fulcrum Therapeutics after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Fulcrum Therapeutics' financials, such as dilutive stock issuance over the past year. Learn more, and discover the 2 other warning signs we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.