It's been a sad week for Sonendo, Inc. (NYSE:SONX), who've watched their investment drop 12% to US$1.63 in the week since the company reported its second-quarter result. It looks like a positive result overall, with revenues of US$11m beating forecasts by 4.2%. Statutory losses of US$0.57 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Sonendo from five analysts is for revenues of US$41.7m in 2022 which, if met, would be a notable 12% increase on its sales over the past 12 months. Losses are expected to increase slightly, to US$2.24 per share. Before this earnings announcement, the analysts had been modelling revenues of US$42.3m and losses of US$2.24 per share in 2022.
The analysts trimmed their valuations, with the average price target falling 19% to US$5.08, with the ongoing losses seemingly weighing on sentiment, despite no real changes to the earnings forecasts. 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 Sonendo at US$6.90 per share, while the most bearish prices it at US$4.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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 period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 25% growth on an annualised basis. That is in line with its 24% annual growth over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 7.9% per year. So although Sonendo is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Sonendo's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Sonendo. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Sonendo going out to 2024, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 4 warning signs for Sonendo (of which 1 is a bit unpleasant!) you should know about.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here