Today is shaping up negative for Venus Concept Inc. (NASDAQ:VERO) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
Following the latest downgrade, Venus Concept's four analysts currently expect revenues in 2022 to be US$111m, approximately in line with the last 12 months. Losses are expected to be contained, narrowing 11% from last year to US$0.46. However, before this estimates update, the consensus had been expecting revenues of US$127m and US$0.28 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.
The consensus price target fell 38% to US$2.75, implicitly signalling that lower earnings per share are a leading indicator for Venus Concept's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Venus Concept, with the most bullish analyst valuing it at US$8.25 and the most bearish at US$1.00 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely differing views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 0.5% growth on an annualised basis. That is in line with its 0.6% annual growth over the past three years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 7.9% annually. So although Venus Concept is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Venus Concept's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Venus Concept.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Venus Concept's financials, such as dilutive stock issuance over the past year. For more information, you can click here to discover this and the 2 other risks we've identified.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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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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