Yahoo Finance Some Outset Medical, Inc. (NASDAQ:OM) Analysts Just Made A Major Cut To Next Year's Estimates
One thing we could say about the analysts on Outset Medical, Inc. (NASDAQ:OM) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. Surprisingly the share price has been buoyant, rising 15% to US$19.41 in the past 7 days. It will be interesting to see if the downgrade has an impact on buying demand for the company's shares.
Following the latest downgrade, Outset Medical's six analysts currently expect revenues in 2022 to be US$108m, approximately in line with the last 12 months. Losses are expected to increase slightly, to US$3.32 per share. However, before this estimates update, the consensus had been expecting revenues of US$124m and US$2.92 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
View our latest analysis for Outset Medical
The consensus price target fell 6.0% to US$28.00, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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. Currently, the most bullish analyst values Outset Medical at US$48.00 per share, while the most bearish prices it at US$22.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 3.7% by the end of 2022. This indicates a significant reduction from annual growth of 39% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.9% annually for the foreseeable future. It's pretty clear that Outset Medical's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Outset Medical. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Outset Medical.
That said, the analysts might have good reason to be negative on Outset Medical, given recent substantial insider selling. Learn more, and discover the 3 other warning signs we've identified, for free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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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