Yahoo Finance Earnings Update: Treace Medical Concepts, Inc. (NASDAQ:TMCI) Just Reported And Analysts Are Trimming Their Forecasts
There's been a major selloff in Treace Medical Concepts, Inc. (NASDAQ:TMCI) shares in the week since it released its first-quarter report, with the stock down 59% to US$4.43. It looks like a positive result overall, with revenues of US$51m beating forecasts by 4.2%. Statutory losses of US$0.30 per share were roughly in line with what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Check out our latest analysis for Treace Medical Concepts
Taking into account the latest results, the consensus forecast from Treace Medical Concepts' seven analysts is for revenues of US$205.5m in 2024. This reflects a credible 4.8% improvement in revenue compared to the last 12 months. Losses are expected to increase slightly, to US$0.90 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$222.8m and losses of US$0.93 per share in 2024. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers fell somewhat.
The analysts have cut their price target 47% to US$8.42per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses. 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. The most optimistic Treace Medical Concepts analyst has a price target of US$16.00 per share, while the most pessimistic values it at US$5.50. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Treace Medical Concepts' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Treace Medical Concepts' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 6.5% growth on an annualised basis. This is compared to a historical growth rate of 35% over the past three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.1% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Treace Medical Concepts.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Yet - earnings are more important to the intrinsic value of the business. 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 Simply Wall St, we have a full range of analyst estimates for Treace Medical Concepts 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 2 warning signs with Treace Medical Concepts (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.
