These Analysts Think Fulcrum Therapeutics, Inc.'s (NASDAQ:FULC) Sales Are Under Threat

Market forces rained on the parade of Fulcrum Therapeutics, Inc. (NASDAQ:FULC) shareholders today, when the analysts downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the latest downgrade, the eight analysts covering Fulcrum Therapeutics provided consensus estimates of US$13m revenue in 2022, which would reflect a concerning 34% decline on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$2.60 per share. However, before this estimates update, the consensus had been expecting revenues of US$15m and US$2.43 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

Check out our latest analysis for Fulcrum Therapeutics

The consensus price target was broadly unchanged at US$32.88, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. 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. There are some variant perceptions on Fulcrum Therapeutics, with the most bullish analyst valuing it at US$43.00 and the most bearish at US$18.00 per share. 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.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 43% by the end of 2022. This indicates a significant reduction from annual growth of 116% 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 3.1% 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 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. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Fulcrum Therapeutics going forwards.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Fulcrum Therapeutics' business, like dilutive stock issuance over the past year. Learn more, and discover the 3 other flags we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks 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.