Last week, you might have seen that Establishment Labs Holdings Inc. (NASDAQ:ESTA) released its yearly result to the market. The early response was not positive, with shares down 3.8% to US$14.58 in the past week. The statutory results were not great - while revenues of US$90m were in line with expectations,Establishment Labs Holdings lost US$1.86 a share in the process. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Following last week's earnings report, Establishment Labs Holdings's four analysts are forecasting 2020 revenues to be US$88.3m, approximately in line with the last 12 months. Per-share statutory losses are expected to explode, reaching US$1.45 per share. Before this earnings announcement, analysts had been forecasting revenues of US$107.7m and losses of US$1.56 per share in 2020. So there's been quite a change-up of views after the latest results, with analysts making a serious cut to their revenue forecasts while also granting a slight bump in to the earnings per share numbers.
Analysts have cut their price target 27% to US$29.00 per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Establishment Labs Holdings analyst has a price target of US$35.00 per share, while the most pessimistic values it at US$25.00. 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.
Further, we can compare these estimates to past performance, and see how Establishment Labs Holdings forecasts compare to the wider market's forecast performance. These estimates imply that sales are expected to slow, with a forecast revenue decline of 1.4% a significant reduction from annual growth of 42% over the last three years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 7.7% next year. It's pretty clear that Establishment Labs Holdings's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. Still, earnings are more important to the long-term value of the business. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Establishment Labs Holdings analysts - going out to 2024, and you can see them free on our platform here.
It might also be worth considering whether Establishment Labs Holdings's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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