Some DarioHealth Corp. (NASDAQ:DRIO) Analysts Just Made A Major Cut To Next Year's Estimates
The latest analyst coverage could presage a bad day for DarioHealth Corp. (NASDAQ:DRIO), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.
Following the latest downgrade, the current consensus, from the five analysts covering DarioHealth, is for revenues of US$25m in 2023, which would reflect a perceptible 7.2% reduction in DarioHealth's sales over the past 12 months. Losses are forecast to hold steady at around US$2.18 per share. However, before this estimates update, the consensus had been expecting revenues of US$28m and US$1.86 per share in losses. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
See our latest analysis for DarioHealth
The consensus price target fell 7.9% to US$8.62, implicitly signalling that lower earnings per share are a leading indicator for DarioHealth's valuation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 14% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 35% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.9% annually for the foreseeable future. It's pretty clear that DarioHealth's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at DarioHealth. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that DarioHealth's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of DarioHealth.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple DarioHealth analysts - going out to 2025, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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.
