Analysts covering Fulgent Genetics, Inc. (NASDAQ:FLGT) sent a dose of negativity to shareholders today, by making a substantial revision to their statutory guidance for next year. Earnings estimates were cut sharply as analysts signaled a weaker outlook – perhaps a sign that investors should also temper their expectations. The stock price rose 6.7% to US$37.02 over the past week. Investors could be forgiven for changing their minds about the company after the downgrade; but it’s unclear if the revised guidance will lead to selling activity.
Following the latest downgrade, the current consensus, from the two analysts covering Fulgent Genetics, is for revenue of US$262 million in 2023, which would reflect a massive 67% reduction in Fulgent Genetics’ sales over the past few years. last 12 months. Prior to the latest estimates, analysts were forecasting revenue of $349 million in 2023. It appears that the forecast has become a little less optimistic for Fulgent Genetics, given the fairly significant reduction in revenue estimates.
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Notably, analysts cut their price target by 15% to US$57.50, suggesting concerns over Fulgent Genetics’ valuation. There is, however, another way to think about price targets, and that is to look at the range of price targets offered by analysts, as a wide range of estimates could suggest a diverse view of possible outcomes for the market. company. Currently, the most bullish analyst values Fulgent Genetics at $65.00 per share, while the most bearish one values it at $50.00. Even so, with a relatively close group of estimates, it seems that analysts are quite confident in their assessments, suggesting that Fulgent Genetics is an easy company to predict or that the underlying assumptions are obvious.
Another way to view these estimates is in the context of the bigger picture, such as how the forecast compares to past performance, and whether the forecast is more or less optimistic compared to other companies in the industry. We highlight that sales are expected to reverse, with an expected decline in annualized revenue of 59% through the end of 2023. This is a notable change from the historical growth of 68% over the past five last years. Compare that with our data, which suggests that other companies in the same industry should, overall, see revenue growth of 7.6% annually. So while its revenue is expected to decline, there is no bright side to this cloud – Fulgent Genetics is expected to lag the industry at large.
The faint bright light was that analysts were cutting their revenue forecasts for Fulgent Genetics next year. They also expect the company’s earnings to fare worse than the broader market. The consensus price target fell measurably as analysts seemed unreassured by recent trading developments, leading to a lower estimate of Fulgent Genetics’ future valuation. All in all, given the drastic downgrade to next year’s forecast, we would feel a bit more wary about the future of Fulgent Genetics.
That said, analysts might have good reason to be negative about Fulgent Genetics, given recent substantial insider selling. Learn more, and discover the other 2 concerns we have identified, for free on our platform here.
Of course, see the management of the company invest large sums of money in a stock can be just as useful as knowing if analysts are lowering their estimates. So you can also search this free list of stocks that insiders buy.
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Find out if Searing genetics is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
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