As you might know, Talkspace, Inc. (NASDAQ:TALK) last week released its latest second-quarter, and things did not turn out so great for shareholders. Revenues missed expectations somewhat, coming in at US$30m and leading to a corresponding blowout in statutory losses. The loss per share was US$0.15, some 15% larger than the analysts forecast. 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.
After the latest results, the five analysts covering Talkspace are now predicting revenues of US$120.6m in 2022. If met, this would reflect a satisfactory 4.3% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$0.54 per share. Before this latest report, the consensus had been expecting revenues of US$126.9m and US$0.51 per share in losses. So it's pretty clear consensus is more negative on Talkspace after the new consensus numbers; while the analysts trimmed their revenue estimates, they also administered a pronounced increase to per-share loss expectations.
The average price target fell 5.9% to US$2.00, implicitly signalling that lower earnings per share are a leading indicator for Talkspace's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Talkspace at US$3.50 per share, while the most bearish prices it at US$1.50. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 8.9% growth on an annualised basis. That is in line with its 9.7% annual growth over the past year. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 7.2% per year. It's clear that while Talkspace's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Sadly, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Talkspace's 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 estimates - from multiple Talkspace analysts - going out to 2024, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Talkspace , and understanding these should be part of your investment process.
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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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