What You Need To Know About The Fulcrum Therapeutics, Inc. (NASDAQ:FULC) Analyst Downgrade Today

The latest analyst coverage could presage a bad day for Fulcrum Therapeutics, Inc. (NASDAQ:FULC), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the current consensus, from the nine analysts covering Fulcrum Therapeutics, is for revenues of US$6.3m in 2023, which would reflect a disturbing 41% reduction in Fulcrum Therapeutics' sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$8.7m in 2023. The consensus view seems to have become more pessimistic on Fulcrum Therapeutics, noting the sizeable cut to revenue estimates in this update.

Check out the opportunities and risks within the US Pharmaceuticals industry.

Notably, the analysts have cut their price target 26% to US$21.89, suggesting concerns around Fulcrum Therapeutics' valuation. 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. There are some variant perceptions on Fulcrum Therapeutics, with the most bullish analyst valuing it at US$35.00 and the most bearish at US$8.00 per share. 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. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

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. We would highlight that sales are expected to reverse, with a forecast 34% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 65% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.8% annually for the foreseeable future. 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 clear low-light was that analysts slashing their revenue forecasts for Fulcrum Therapeutics next year. They're also anticipating slower revenue growth than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. 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.

There might be good reason for analyst bearishness towards Fulcrum Therapeutics, 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.