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Arcutis Biotherapeutics, Inc. (NASDAQ:ARQT) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that Arcutis Biotherapeutics will make substantially more sales than they'd previously expected.
After the upgrade, the seven analysts covering Arcutis Biotherapeutics are now predicting revenues of US$37m in 2023. If met, this would reflect a sizeable 226% improvement in sales compared to the last 12 months. Losses are expected to be contained, narrowing 12% per share from last year to US$4.71 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$29m and losses of US$4.95 per share in 2023. 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.
View our latest analysis for Arcutis Biotherapeutics
The consensus price target fell 5.8%, to US$41.57, suggesting that the analysts remain pessimistic on the company, despite the improved earnings and revenue outlook.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Arcutis Biotherapeutics' rate of growth is expected to accelerate meaningfully, with the forecast 10x annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 151% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Arcutis Biotherapeutics to grow faster than the wider industry.
The Bottom Line
The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Arcutis Biotherapeutics is moving incrementally towards profitability. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Arcutis Biotherapeutics' future valuation. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Arcutis Biotherapeutics.