It's been a good week for Fulgent Genetics, Inc. (NASDAQ:FLGT) shareholders, because the company has just released its latest annual results, and the shares gained 7.1% to US$33.74. Fulgent Genetics reported US$619m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$4.63 beat expectations, being 5.5% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus, from the three analysts covering Fulgent Genetics, is for revenues of US$241.6m in 2023, which would reflect a stressful 61% reduction in Fulgent Genetics' sales over the past 12 months. Earnings are expected to tip over into lossmaking territory, with the analysts forecasting statutory losses of -US$2.45 per share in 2023. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$260.8m and losses of US$2.64 per share in 2023. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.
There was no major change to the US$43.33average price target, suggesting that the adjustments to revenue and earnings are not expected to have a long-term impact on the business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Fulgent Genetics analyst has a price target of US$45.00 per share, while the most pessimistic values it at US$40.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
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. We would highlight that sales are expected to reverse, with a forecast 61% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 62% 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 7.7% per year. It's pretty clear that Fulgent Genetics' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. Still, earnings per share are more important to value creation for shareholders. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Fulgent Genetics going out to 2025, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 2 warning signs for Fulgent Genetics (of which 1 can't be ignored!) you should know about.
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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.
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