It's shaping up to be a tough period for iSpecimen Inc. (NASDAQ:ISPC), which a week ago released some disappointing second-quarter results that could have a notable impact on how the market views the stock. The numbers were weak, with revenues of US$2.3m coming in 18% short of analyst estimates. Statutory losses were US$0.30 per share, 9.1% larger than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, iSpecimen's three analysts currently expect revenues in 2022 to be US$9.94m, approximately in line with the last 12 months. Per-share losses are expected to explode, reaching US$1.27 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$11.4m and losses of US$1.13 per share in 2022. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.
The average price target fell 11% to US$9.83, implicitly signalling that lower earnings per share are a leading indicator for iSpecimen's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on iSpecimen, with the most bullish analyst valuing it at US$14.00 and the most bearish at US$5.50 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the iSpecimen's past performance and to peers in the same industry. We would also point out that the forecast 3.7% annualised revenue decline to the end of 2022 is better than the historical trend, which saw revenues shrink 6.6% annually over the past year Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 16% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect iSpecimen to suffer worse than the wider industry.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at iSpecimen. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of iSpecimen's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on iSpecimen. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple iSpecimen analysts - going out to 2024, and you can see them free on our platform here.
It is also worth noting that we have found 5 warning signs for iSpecimen (1 shouldn't be ignored!) that you need to take into consideration.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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