Expanding Obesity Solutions Will Boost Prospects Amid Launch Uncertainties

Key Takeaways

• Shifting to comprehensive, minimally invasive obesity solutions with device-plus-GLP-1 strategy supports stronger adoption, retention, and revenue growth opportunities worldwide.
  
• Streamlined operations and innovative product pipeline position the company for improved margins, cash flow, and long-term leadership as regulatory milestones approach.
  
• Strategic restructuring, regulatory uncertainty, market risks, and funding challenges together threaten growth prospects, financial stability, and Allurion's long-term viability.

Catalysts

Focuses on ending obesity with a weight loss platform to treat people who are overweight.

• The global rise in obesity and growing medical acceptance of obesity as a chronic disease are expanding the addressable market for evidence-based, effective, and minimally invasive weight loss treatments like Allurion's, which should drive substantial long-term revenue growth as the company moves toward possible U.S. approval and international expansion.
  
• Increasing clinical and regulatory focus on preventive, holistic, and durable obesity management is favoring comprehensive solutions combining medical devices, behavioral modification, and digital support – a direct fit with Allurion's pivot to "metabolically healthy" weight loss via device-plus-low-dose-GLP-1, which can improve both patient outcomes and payer adoption, supporting higher adoption rates, improved retention, and ultimately stronger top-line growth.
  
• Ongoing restructuring and focus on operating efficiency have materially reduced operating expenses and improved loss from operations, laying the groundwork for improved net margins and better cash flow leverage, especially if anticipated revenue growth materializes from the new strategy.
  
• Advancement of Allurion's R&D pipeline-including development of a novel GLP-1 drug-eluting balloon, innovation in balloon design, and digital therapeutics integration-creates the potential for differentiated, higher-margin product offerings and additional revenue streams, supporting longer-term earnings growth and product leadership.
  
• Positive regulatory progress (PMA filing with the FDA and strong clinical data from AUDACITY and OUS publications) positions Allurion for a transformative U.S. launch into an underpenetrated yet massive domestic market, priming the company for significant future revenue inflection and upside to earnings once approval and commercialization occur.

Allurion Technologies Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Allurion Technologies's revenue will decrease by 0.7% annually over the next 3 years.
• Analysts are not forecasting that Allurion Technologies will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Allurion Technologies's profit margin will increase from -86.0% to the average US Consumer Services industry of 11.7% in 3 years.
• If Allurion Technologies's profit margin were to converge on the industry average, you could expect earnings to reach $3.2 million (and earnings per share of $0.36) by about August 2028, up from $-24.4 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 33.0x on those 2028 earnings, up from -0.8x today. This future PE is greater than the current PE for the US Consumer Services industry at 16.9x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 12.32%, as per the Simply Wall St company report.

Allurion Technologies Future Earnings Per Share Growth

Risks

• The company is in the midst of a significant strategic pivot-transitioning away from existing distributors and resizing its sales force-which has already resulted in a steep year-over-year revenue drop ($11.8M to $3.4M) and is expected to be disruptive in the near term; if long-term execution falters or new partnerships underperform, persistent revenue weakness or recovery delays could threaten earnings and financial stability.
  
• Heavy reliance on product and commercial success of combination therapy with GLP-1s and the unproven future pipeline (e.g., GLP-1 drug-eluting balloon) exposes Allurion to risks from technological disruption by alternative therapies (notably next-gen injectables, oral drugs, or other weight loss interventions), which could diminish addressable market size and erode future revenue growth.
  
• Increasing regulatory scrutiny and the need for FDA approval for U.S. market entry adds uncertainty to commercialization timelines and may incur further costs or delays; failure to secure timely approval or meet regulatory endpoints could defer or reduce anticipated U.S. revenues and impact net margins.
  
• Ongoing reductions in operating expenses, R&D, and sales/marketing (driven by restructuring) could constrain the company's ability to invest in innovation, maintain competitive differentiation, or effectively capture new market opportunities, leading to potential stagnation in top-line growth and limited operating leverage.
  
• With cash and cash equivalents at just $12.7M and no clear articulation of how the upcoming U.S. launch or commercial strategy will be funded, Allurion may face funding gaps and potential dilution risk, posing significant concerns regarding the sustainability of operations, future R&D, and long-term earnings potential.

Valuation

• The analysts have a consensus price target of $8.375 for Allurion Technologies based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $16.0, and the most bearish reporting a price target of just $2.5.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $27.7 million, earnings will come to $3.2 million, and it would be trading on a PE ratio of 33.0x, assuming you use a discount rate of 12.3%.
  
• Given the current share price of $2.49, the analyst price target of $8.38 is 70.3% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.