TELA Bio, Inc. (NASDAQ:TELA) just released its latest yearly results and things are looking bullish. Results overall were solid, with revenues arriving 4.5% better than analyst forecasts at US$15m. Higher revenues also resulted in substantially lower statutory losses which, at per share, were 4.5% smaller than the analysts expected. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from TELA Bio's four analysts is for revenues of US$20.0m in 2020, which would reflect a substantial 30% improvement in sales compared to the last 12 months. Statutory losses are forecast to balloon 86% to US$2.44 per share. Prior to the latest earnings, the analysts were forecasting revenues of US$29.7m in 2020. So we can see that while the consensus made a pretty serious reduction to revenue estimates, it also began providing earnings per share estimates, suggesting a heightened focus on the business' earnings (or lack of), following the latest results.
The consensus price target fell 16% to US$17.00, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on TELA Bio, with the most bullish analyst valuing it at US$22.00 and the most bearish at US$14.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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 pretty clear that there is an expectation that TELA Bio's revenue growth will slow down substantially, with revenues next year expected to grow 30%, compared to a historical growth rate of 87% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.6% next year. So it's pretty clear that, while TELA Bio's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest takeaway for us is that the analysts expects TELA Bio to be lossmaking next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than 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 TELA Bio'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 TELA Bio analysts - going out to 2023, and you can see them free on our platform here.
Plus, you should also learn about the 3 warning signs we've spotted with TELA Bio .
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