Analysts Just Made A Major Revision To Their Cue Health Inc. (NASDAQ:HLTH) Revenue Forecasts
Market forces rained on the parade of Cue Health Inc. (NASDAQ:HLTH) shareholders today, when the analysts downgraded their forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the downgrade, the consensus from four analysts covering Cue Health is for revenues of US$95m in 2023, implying a sizeable 71% decline in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of US$115m in 2023. It looks like forecasts have become a fair bit less optimistic on Cue Health, given the substantial drop in revenue estimates.
Check out our latest analysis for Cue Health
We'd point out that there was no major changes to their price target of US$5.19, suggesting the latest estimates were not enough to shift their view on the value of the business. 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 Cue Health analyst has a price target of US$8.00 per share, while the most pessimistic values it at US$2.75. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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. One more thing stood out to us about these estimates, and it's the idea that Cue Health's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 81% to the end of 2023. This tops off a historical decline of 55% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 8.3% per year. So while a broad number of companies are forecast to grow, unfortunately Cue Health is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Cue Health after today.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Cue Health's financials, such as a short cash runway. For more information, you can click here to discover this and the 4 other flags we've identified.
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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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