It's been a sad week for STRATA Skin Sciences, Inc. (NASDAQ:SSKN), who've watched their investment drop 15% to US$1.16 in the week since the company reported its quarterly result. Revenues of US$6.7m arrived in line with expectations, although statutory losses per share were US$0.03, an impressive 44% smaller than what broker models predicted. 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 three analysts covering STRATA Skin Sciences provided consensus estimates of US$26.0m revenue in 2020, which would reflect an uneasy 16% decline on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$0.17 per share. Before this earnings announcement, the analysts had been modelling revenues of US$25.8m and losses of US$0.13 per share in 2020. So it's pretty clear the analysts have mixed opinions on STRATA Skin Sciences even after this update; although they reconfirmed their revenue numbers, it came at the cost of a per-share losses.
With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 13% to US$4.88, with the analysts signalling that growing losses would be a definite concern. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values STRATA Skin Sciences at US$6.00 per share, while the most bearish prices it at US$3.75. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 16%, a significant reduction from annual growth of 16% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.7% annually for the foreseeable future. It's pretty clear that STRATA Skin Sciences' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that STRATA Skin Sciences' revenues are expected to perform worse 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 STRATA Skin Sciences' future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for STRATA Skin Sciences going out to 2022, and you can see them free on our platform here..
Plus, you should also learn about the 5 warning signs we've spotted with STRATA Skin Sciences (including 1 which is a bit unpleasant) .
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