Yahoo Finance Earnings Update: ReShape Lifesciences Inc. (NASDAQ:RSLS) Just Reported And Analysts Are Trimming Their Forecasts
ReShape Lifesciences Inc. (NASDAQ:RSLS) missed earnings with its latest full-year results, disappointing overly-optimistic forecasters. Revenues missed expectations somewhat, coming in at US$14m, but statutory earnings fell catastrophically short, with a loss of US$5.00 some 72% larger than what the analysts had predicted. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
See our latest analysis for ReShape Lifesciences
Following the latest results, ReShape Lifesciences' twin analysts are now forecasting revenues of US$18.9m in 2022. This would be a huge 39% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 67% to US$1.17. Before this latest report, the consensus had been expecting revenues of US$20.6m and US$0.68 per share in losses. While this year's revenue estimates dropped there was also a very substantial increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The average price target fell 48% to US$4.75, implicitly signalling that lower earnings per share are a leading indicator for ReShape Lifesciences' valuation.
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 pretty clear that there is an expectation that ReShape Lifesciences' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 39% growth on an annualised basis. This is compared to a historical growth rate of 50% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.0% annually. Even after the forecast slowdown in growth, it seems obvious that ReShape Lifesciences is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at ReShape Lifesciences. They also downgraded their revenue estimates, although industry data suggests that ReShape Lifesciences' revenues are expected to grow faster than the wider industry. 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.
However, before you get too enthused, we've discovered 4 warning signs for ReShape Lifesciences (1 shouldn't be ignored!) that you should be aware of.
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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.
