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Earnings Update: Here's Why Analysts Just Lifted Their Castlight Health, Inc. (NYSE:CSLT) Price Target To US$1.31

Simply Wall St
·3 min read

Investors in Castlight Health, Inc. (NYSE:CSLT) had a good week, as its shares rose 7.9% to close at US$0.95 following the release of its quarterly results. Revenues beat expectations, coming in 16% ahead of forecasts, and the company broke even on a statutory earnings per share (EPS) level. The 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Castlight Health

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earnings-and-revenue-growth

After the latest results, the consensus from Castlight Health's six analysts is for revenues of US$132.2m in 2021, which would reflect a chunky 9.8% decline in sales compared to the last year of performance. The loss per share is expected to greatly reduce in the near future, narrowing 67% to US$0.18. Before this latest report, the consensus had been expecting revenues of US$131.8m and US$0.18 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for next year.

These new estimates led to the consensus price target rising 17% to US$1.31, with lower forecast losses suggesting things could be looking up for Castlight Health. 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. Currently, the most bullish analyst values Castlight Health 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast revenue decline of 9.8%, a significant reduction from annual growth of 15% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 19% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Castlight Health is expected to lag 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. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 Castlight Health going out to 2024, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 3 warning signs for Castlight Health you should be aware of.

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.