Arcus Biosciences, Inc. (NYSE:RCUS) Just Reported, And Analysts Assigned A US$29.60 Price Target

As you might know, Arcus Biosciences, Inc. (NYSE:RCUS) just kicked off its latest third-quarter results with some very strong numbers. Revenues of US$26m beat estimates by a substantial 28% margin. Unfortunately, Arcus Biosciences also reported a statutory loss of US$1.27 per share, which at least was smaller than the analysts 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Taking into account the latest results, the eight analysts covering Arcus Biosciences provided consensus estimates of US$129.9m revenue in 2026, which would reflect a sizeable 46% decline over the past 12 months. Losses are forecast to balloon 34% to US$4.23 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$130.3m and losses of US$4.20 per share in 2026.

View our latest analysis for Arcus Biosciences

The analysts trimmed their valuations, with the average price target falling 5.3% to US$29.60, with the ongoing losses seemingly weighing on sentiment, despite no real changes to the earnings forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Arcus Biosciences analyst has a price target of US$56.00 per share, while the most pessimistic values it at US$14.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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. We would highlight that revenue is expected to reverse, with a forecast 39% annualised decline to the end of 2026. That is a notable change from historical growth of 8.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 22% per year. It's pretty clear that Arcus Biosciences' revenues are expected to perform substantially worse than 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, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Arcus Biosciences' revenue is expected to perform worse than the wider industry. 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Arcus Biosciences going out to 2027, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Arcus Biosciences that you need to be mindful of.

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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.