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Earnings Release: Here's Why Analysts Cut Their Conformis, Inc. (NASDAQ:CFMS) Price Target To US$2.33

Simply Wall St
·3 min read

Conformis, Inc. (NASDAQ:CFMS) investors will be delighted, with the company turning in some strong numbers with its latest results. Conformis outperformed on both revenues and the expected loss per share, with revenues of US$16m beating estimates by 12%. Statutory losses were US$0.09, 23% smaller thanthe analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Conformis

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Taking into account the latest results, the consensus forecast from Conformis' four analysts is for revenues of US$79.6m in 2021, which would reflect a notable 11% improvement in sales compared to the last 12 months. Losses are expected to hold steady at around US$0.34. Before this earnings announcement, the analysts had been modelling revenues of US$77.9m and losses of US$0.32 per share in 2021. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although there was a nice uplift to revenue, the consensus also made a to its losses per share forecasts.

Spiting the revenue upgrading, the average price target fell 6.7% to US$2.33, clearly signalling that higher forecast losses are a valuation concern. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Conformis at US$3.00 per share, while the most bearish prices it at US$2.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. It's clear from the latest estimates that Conformis' rate of growth is expected to accelerate meaningfully, with the forecast 11% revenue growth noticeably faster than its historical growth of 2.6%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.9% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Conformis is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Conformis' future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Conformis going out to 2022, and you can see them free on our platform here.

It is also worth noting that we have found 4 warning signs for Conformis that you need to take into consideration.

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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