Earnings Update: Ra Medical Systems, Inc. (NYSE:RMED) Just Reported And Analysts Are Trimming Their Forecasts
It's shaping up to be a tough period for Ra Medical Systems, Inc. (NYSE:RMED), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. The numbers were weak, with revenues of US$914k coming in 15% short of analyst estimates. Statutory losses were US$0.13 per share, 4.0% larger than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
See our latest analysis for Ra Medical Systems
Taking into account the latest results, the current consensus from Ra Medical Systems' two analysts is for revenues of US$6.22m in 2021, which would reflect a huge 36% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 69% to US$0.40. Before this latest report, the consensus had been expecting revenues of US$7.03m and US$0.41 per share in losses. We can see there's definitely been a change in sentiment in this update, with the analysts administering a meaningful downgrade to next year's revenue estimates, while at the same time reducing their loss estimates.
The analysts have cut their price target 40% to US$0.75per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses.
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. The analysts are definitely expecting Ra Medical Systems' growth to accelerate, with the forecast 36% growth ranking favourably alongside historical growth of 0.9% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 10.0% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Ra Medical Systems to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Still, earnings per share are more important to value creation for shareholders. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Ra Medical Systems' future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Ra Medical Systems going out as far as 2022, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 5 warning signs for Ra Medical Systems (1 can't be ignored!) that 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.
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