Last week, you might have seen that Fate Therapeutics, Inc. (NASDAQ:FATE) released its full-year result to the market. The early response was not positive, with shares down 9.8% to US$1.01 in the past week. Fate Therapeutics reported revenues of US$14m, in line with expectations, but it unfortunately also reported (statutory) losses of US$1.64 per share, which were slightly larger than 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Fate Therapeutics NasdaqGM:FATE Earnings and Revenue Growth March 8th 2025

Taking into account the latest results, the current consensus, from the ten analysts covering Fate Therapeutics, is for revenues of US$2.45m in 2025. This implies a painful 82% reduction in Fate Therapeutics' revenue over the past 12 months. Losses are forecast to narrow 2.9% to US$1.58 per share. Before this earnings announcement, the analysts had been modelling revenues of US$4.24m and losses of US$1.73 per share in 2025. We can see there's definitely been a change in sentiment in this update, with the analysts administering a meaningful downgrade to next year's revenue estimates, while at the same time reducing their loss estimates.

The analysts have cut their price target 5.3% to US$6.00per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Fate Therapeutics at US$12.00 per share, while the most bearish prices it at US$3.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 82% by the end of 2025. This indicates a significant reduction from annual growth of 11% 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 20% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Fate Therapeutics is expected to lag the wider industry.

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The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Still, earnings per share are more important to value creation for shareholders. 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Fate Therapeutics analysts - going out to 2027, and you can see them free on our platform here.

Even so, be aware that  Fate Therapeutics is showing  4 warning signs in our investment analysis, and 1 of those is a bit unpleasant...

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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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