Party Time: Brokers Just Made Major Increases To Their Arcus Biosciences, Inc. (NYSE:RCUS) Earnings Forecasts

Simply Wall St · 05/13 10:46

Celebrations may be in order for Arcus Biosciences, Inc. (NYSE:RCUS) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. The stock price has risen 4.8% to US$16.71 over the past week, suggesting investors are becoming more optimistic. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

Following the upgrade, the most recent consensus for Arcus Biosciences from its nine analysts is for revenues of US$284m in 2024 which, if met, would be a decent 20% increase on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$3.26 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$187m and losses of US$3.85 per share in 2024. 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.

See our latest analysis for Arcus Biosciences

NYSE:RCUS Earnings and Revenue Growth May 13th 2024

There was no major change to the consensus price target of US$39.11, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Arcus Biosciences' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 27% growth on an annualised basis. This is compared to a historical growth rate of 35% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 18% per year. Even after the forecast slowdown in growth, it seems obvious that Arcus Biosciences is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around Arcus Biosciences' prospects. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at Arcus Biosciences.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Arcus Biosciences analysts - going out to 2026, and you can see them 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.