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BIOLASE, Inc. (NASDAQ:BIOL) Just Reported Earnings, And Analysts Cut Their Target Price

Simply Wall St
·4 min read

It's been a good week for BIOLASE, Inc. (NASDAQ:BIOL) shareholders, because the company has just released its latest third-quarter results, and the shares gained 7.1% to US$0.29. It was a pretty bad result overall; while revenues were in line with expectations at US$6.5m, statutory losses exploded to US$0.21 per share. 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.

See our latest analysis for BIOLASE

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the current consensus from BIOLASE's four analysts is for revenues of US$39.4m in 2021, which would reflect a huge 61% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 83% to US$0.12. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$40.7m and losses of US$0.11 per share in 2021. So it's pretty clear consensus is more negative on BIOLASE after the new consensus numbers; while the analysts trimmed their revenue estimates, they also administered a per-share loss expectations.

The consensus price target fell 12% to US$1.41, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values BIOLASE at US$2.00 per share, while the most bearish prices it at US$1.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. For example, we noticed that BIOLASE's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 61%, well above its historical decline of 9.3% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 10.0% per year. Not only are BIOLASE's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at BIOLASE. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. 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.

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 BIOLASE going out to 2022, and you can see them free on our platform here..

You still need to take note of risks, for example - BIOLASE has 4 warning signs (and 1 which is a bit unpleasant) we think you should know about.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.