iRhythm Technologies, Inc. (NASDAQ:IRTC) came out with its annual results last week, and we wanted to see how the business is performing and what top analysts think of the company following this report. Sales hit US$215m in line with forecasts, although the company reported a statutory loss per share of US$2.16 that was somewhat smaller than analysts expected. 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. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Following the latest results, iRhythm Technologies's eight analysts are now forecasting revenues of US$286.1m in 2020. This would be a major 33% improvement in sales compared to the last 12 months. Statutory losses are expected to increase substantially, hitting US$1.93. per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$283.6m and losses of US$1.50 per share in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.
The consensus price target held steady at US$108, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic iRhythm Technologies analyst has a price target of US$125 per share, while the most pessimistic values it at US$90.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await iRhythm Technologies shareholders.
In addition, we can look to iRhythm Technologies's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. We can infer from the latest estimates that analysts are expecting a continuation of iRhythm Technologies's historical trends, as next year's forecast 33% revenue growth is roughly in line with 39% annual revenue growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 7.7% next year. So although iRhythm Technologies is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider market.
The Bottom Line
The most obvious conclusion is that analysts made no changes to their forecasts for a loss next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that iRhythm Technologies's revenues are expected to grow faster than the wider market. The consensus price target held steady at US$108, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple iRhythm Technologies analysts - going out to 2022, and you can see them free on our platform here.
We also provide an overview of the iRhythm Technologies Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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