Yahoo Finance Analysts Are Updating Their Outset Medical, Inc. (NASDAQ:OM) Estimates After Its First-Quarter Results
It's shaping up to be a tough period for Outset Medical, Inc. (NASDAQ:OM), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. Revenues missed expectations somewhat, coming in at US$28m, but statutory earnings fell catastrophically short, with a loss of US$0.78 some 28% larger than what the analysts had predicted. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Outset Medical
Taking into account the latest results, the most recent consensus for Outset Medical from eight analysts is for revenues of US$146.6m in 2024. If met, it would imply a meaningful 17% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 39% to US$1.99. Before this latest report, the consensus had been expecting revenues of US$148.2m and US$2.36 per share in losses. Although the revenue estimates have not really changed Outset Medical'sfuture looks a little different to the past, with a notable improvement in the loss per share forecasts in particular.
There's been no major changes to the consensus price target of US$5.79, suggesting that reduced loss estimates are not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Outset Medical, with the most bullish analyst valuing it at US$9.00 and the most bearish at US$3.00 per share. 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.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Outset Medical's growth to accelerate, with the forecast 24% annualised growth to the end of 2024 ranking favourably alongside historical growth of 18% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 8.1% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Outset Medical is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Outset Medical going out to 2026, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with Outset Medical (at least 1 which makes us a bit uncomfortable) , and understanding these should be part of your investment process.
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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.
