Value
4.9/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 0.0 |
| P/S | 4.4 |
| Fwd P/E | 5.3 |
| PEG | 10.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 23.9x
- ▸PEG: 0.00
ARQT · Why this verdict
Why Arcutis Biotherapeutics (ARQT) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictHOLD
Overall score6.4/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Arcutis is a fast-growing, wide-moat biotech with 59% YoY growth and consistent earnings beats, but revenue rides on one product franchise and the stock offers only 6.1% upside to the analyst target against 15% downside ahead of earnings in 3 days.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is growing strongly at 59% YoY, with quarterly revenue reaching about $129.9M in the June 2026 quarter versus $81.5M a year earlier. Growth breakdown | Quarterly revenue should keep climbing toward the $142.6M next-quarter estimate and stay above 40% YoY growth. | →Stable |
| CounterGrowth confidence is only 0.33 and prior quarters were lumpy (Q1 2026 revenue of $105M fell below Q4 2025's $129.5M), so the 59% rate may not persist. | ||
The business shows a wide economic moat, a Rule of 40 reading of 64 (elite) and a Piotroski F-Score of 9/9, indicating high-quality fundamentals. Quality breakdown | Rule of 40 should stay above 40 and operating margin should keep improving as revenue scales over the next 12 months. | →Stable |
| CounterEarnings quality is flagged with FCF at only 76% of net income, and operating and net margin component scores are middling at 5.1 and 3.1. | ||
Arcutis beat EPS estimates in 3 of the last 4 quarters with an average surprise of 68.8%, showing earnings power ahead of expectations. Earnings | EPS should continue to meet or beat estimates, including the upcoming report on 2026-11-04. | ↑Improving |
| CounterThe May 2026 quarter was a miss (-0.09 actual vs -0.06 estimate) and the small EPS base makes percentage surprises noisy and unreliable. | ||
Revenue growth depends on the ZORYVE franchise and a single supplier (AstraZeneca), so the growth story holds only if that franchise keeps expanding sequentially. Bear case | Quarterly revenue should stay at or above the latest $129.9M level and trend toward the $142.6M estimate. | →Stable |
| CounterConcentration in one product and one supplier means a supply disruption, pricing pressure or competitive entry could hit nearly all revenue at once. | ||
With only 6.1% upside to the $34.04 analyst target versus 15% downside, reward-to-risk is just 0.41 and earnings in 3 days add binary event risk. Estimated upside | Reward-to-risk should improve toward 1.5 only after a post-earnings pullback or a higher analyst target. | →Stable |
| CounterStrong growth and a 17% short interest could fuel a squeeze and analyst target raises, making the current upside estimate too conservative. | ||
Revenue is growing strongly at 59% YoY, with quarterly revenue reaching about $129.9M in the June 2026 quarter versus $81.5M a year earlier.
→StableGrowth breakdown
- Expectation
- Quarterly revenue should keep climbing toward the $142.6M next-quarter estimate and stay above 40% YoY growth.
CounterGrowth confidence is only 0.33 and prior quarters were lumpy (Q1 2026 revenue of $105M fell below Q4 2025's $129.5M), so the 59% rate may not persist.
The business shows a wide economic moat, a Rule of 40 reading of 64 (elite) and a Piotroski F-Score of 9/9, indicating high-quality fundamentals.
→StableQuality breakdown
- Expectation
- Rule of 40 should stay above 40 and operating margin should keep improving as revenue scales over the next 12 months.
CounterEarnings quality is flagged with FCF at only 76% of net income, and operating and net margin component scores are middling at 5.1 and 3.1.
Arcutis beat EPS estimates in 3 of the last 4 quarters with an average surprise of 68.8%, showing earnings power ahead of expectations.
↑ImprovingEarnings
- Expectation
- EPS should continue to meet or beat estimates, including the upcoming report on 2026-11-04.
CounterThe May 2026 quarter was a miss (-0.09 actual vs -0.06 estimate) and the small EPS base makes percentage surprises noisy and unreliable.
Revenue growth depends on the ZORYVE franchise and a single supplier (AstraZeneca), so the growth story holds only if that franchise keeps expanding sequentially.
→StableBear case
- Expectation
- Quarterly revenue should stay at or above the latest $129.9M level and trend toward the $142.6M estimate.
CounterConcentration in one product and one supplier means a supply disruption, pricing pressure or competitive entry could hit nearly all revenue at once.
With only 6.1% upside to the $34.04 analyst target versus 15% downside, reward-to-risk is just 0.41 and earnings in 3 days add binary event risk.
→StableEstimated upside
- Expectation
- Reward-to-risk should improve toward 1.5 only after a post-earnings pullback or a higher analyst target.
CounterStrong growth and a 17% short interest could fuel a squeeze and analyst target raises, making the current upside estimate too conservative.
Per-dimension breakdown
Quality
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.3 |
| ROA | 3.4 |
| Gross margin | 10.0 |
| Op margin | 5.1 |
| Net margin | 3.1 |
| Current ratio | 9.8 |
| FCF quality | 5.7 |
| Moat | 7.6 |
| Rule of 40 | 9.5 |
| Piotroski F | 10.0 |
- ▸Earnings quality warning: 76% FCF/NI
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
- ▸Rule of 40: 64 (elite)
Growth
10.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
- ▸Strong growth: 59% YoY
Momentum
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 8.2 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.9 |
| Price target | 7.4 |
| erm sentiment | 4.9 |
- ▸Light analyst coverage (8.0) — signal dampened
Insider
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 7.7 |
| notable moves | 7.0 |
- ▸Modest insider selling — $2,004,796 (0.050% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.8 |
| quality rank | 7.0 |
| growth rank | 7.6 |
- ▸Superior ROE vs peers
Technical
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.0 |
| support resistance | 0.1 |
| 52w position | 9.9 |
| gap | 5.0 |
Risk (lower is worse)
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.7 |
| days to cover | 4.3 |
| volatility | 2.3 |
| put call | 10.0 |
| implied vol | 0.0 |
| beta | 4.6 |
| debt equity | 7.9 |
- ▸Short squeeze setup: 17% short, quality 7.5
- ▸High IV: 86%
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Strong earnings: 3B/1M
- ▸Earnings today
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (6)
- MOMENTUM:6.4>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:0.1<1.5@spot
- EARNINGS_PROXIMITY:0d<=7d
Warning (0)
none
Reward-to-Risk
0.12
Upside
+1.8%
Downside
15.0%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 69, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Binary industry: Biotechnology
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:6.4>=5.5. Top dim: Growth at 10.0; weakest: Technical at 4.2. No conviction either direction.
The strongest dimensions are Growth at 10.0, Quality at 7.0, and Sentiment at 6.9; the weakest are Technical at 4.2, Peer rank at 4.8, and Value at 4.9. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 0.12 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Rapid Revenue Growth
Trip ifRevenue growth falls below 25% YoY from current 59%.
- P2Wide Moat Quality Profile
Trip ifRule of 40 score falls below 40 from current 64.
- P3Consistent Earnings Beats
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P4Single Franchise Supplier Concentration
Trip ifQuarterly revenue falls below $105M, the March 2026 quarter level, in any quarter.
- P5Thin Upside Binary Setup
Trip ifReward-to-risk exceeds 1.5 from current 0.41.