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IRIDEX Corporation (NASDAQ:IRIX) Just Reported Earnings, And Analysts Cut Their Target Price

IRIDEX Corporation (NASDAQ:IRIX) investors will be delighted, with the company turning in some strong numbers with its latest results. The results overall were pretty good, with revenues of US$8.8m exceeding expectations and statutory losses coming in at justUS$0.12 per share, some 31% below what the analysts had forecast. 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. 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 IRIDEX

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earnings-and-revenue-growth

Taking into account the latest results, the current consensus from IRIDEX's two analysts is for revenues of US$40.3m in 2021, which would reflect a solid 13% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 50% to US$0.28. Before this latest report, the consensus had been expecting revenues of US$40.4m and US$0.30 per share in losses. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers were unchanged.

The consensus price target fell 14% to US$4.75despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on valuations.

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. For example, we noticed that IRIDEX's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 13%, well above its historical decline of 1.9% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 10.0% next year. Not only are IRIDEX's revenues expected to improve, it seems that the analysts are also expecting it 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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.

You still need to take note of risks, for example - IRIDEX has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

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.

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