Last Update 01 Dec 25

Fair value Increased 0.28%

OWLT: Regulatory Momentum And FDA Approval Will Drive Market Leadership Forward

Analysts have increased their price target for Owlet to $15.50 from $12.00, citing a solid quarter, improved liquidity, and the company's status as the only FDA-approved over-the-counter infant monitoring device as key drivers for their more favorable outlook.

Analyst Commentary

Recent analyst perspectives on Owlet reflect a mixed but largely positive sentiment following the company's most recent financial results and regulatory developments.

Bullish Takeaways

Bullish analysts are encouraged by Owlet’s strong quarterly performance, which they consider a validation of the company’s strategic direction and operational execution.
The additional liquidity from the recent stock offering is seen as a significant advantage. Analysts highlight this ensures ample resources for continued research and development, particularly through 2026.
The company’s position as the only FDA-approved over-the-counter infant monitoring device is recognized as a key competitive advantage. This is especially relevant in light of the recent FDA communication highlighting risks associated with unauthorized devices.
This regulatory clarity is seen as reinforcing Owlet’s market leadership and providing support for potential future growth, which contributes positively to its improved valuation outlook.

Bearish Takeaways

Some analysts maintain a cautious stance. They note that while increased liquidity is promising, sustained investments in R&D must translate into new products or technological advances to justify elevated valuations.
There are still questions around broader market adoption and long-term execution risks as competitors seek FDA approval to close the regulatory gap.
Potential headwinds from regulatory changes or evolving healthcare guidelines could impact Owlet's future growth trajectory.

What's in the News

Owlet announced partnerships with Locus Health and Rhapsody to integrate FDA-cleared BabySat® data into leading health platforms and electronic health records, giving providers secure, ongoing access to infant health data after hospital discharge (Key Developments).
The company provided updated financial guidance for 2025, expecting revenue to reach $103 to $106 million, reflecting anticipated year-over-year growth of 32% to 36% (Key Developments).
Regulatory approval from the Central Drugs Standard Control Organization (CDSCO) paves the way for Owlet’s Dream Sock, Dream Sight, and Dream Duo products to launch in the Indian market in early 2026 (Key Developments).
Class action settlements have been proposed to resolve securities litigation relating to Owlet, totaling $5.25 million in cash, with a hearing scheduled for February 2026 (Key Developments).
Owlet launched new products including the Dream Sight™ HD video monitor and next-generation Dream Duo™, expanding its smart monitoring solutions portfolio in the U.S., Canada, UK, and Europe (Key Developments).

Valuation Changes

Fair Value: Increased modestly from $14.83 to $14.88.
Discount Rate: Decreased slightly from 7.87% to 7.85%.
Revenue Growth: Risen slightly, moving from 25.8% to 26.0%.
Net Profit Margin: Declined marginally from 10.70% to 10.65%.
Future P/E: Edged up slightly from 28.94x to 29.00x.

Growth in digital health device adoption, expanded offerings, and regulatory clearances support strong demand, market leadership, and improved pricing power.
Subscription-based recurring revenue, higher retention, and integration with healthcare providers drive predictable earnings, premium pricing, and broader market access.
Slow healthcare channel progress, international tariffs, portfolio concentration, and adoption uncertainty threaten revenue growth, margin stability, and successful expansion of new services.

Catalysts

About Owlet

Provides digital parenting solutions in the United States, the United Kingdom, and internationally.What are the underlying business or industry changes driving this perspective?

Accelerating adoption of connected health devices among parents-evidenced by double-digit sales growth, increased registry listings, and international expansion-signals strong underlying demand as digital health solutions become mainstream, which is likely to drive sustained revenue growth.
Transition to a recurring subscription model (Owlet360), with 66,000+ paying subscribers and improving attach/retention rates, will increase customer lifetime value and provide more predictable, higher-margin recurring revenue streams.
Expansion of product offerings into AI-driven insights and enhanced platform features (including telehealth and historical data analytics) leverages rising digital health literacy, likely supporting premium pricing, higher ARPU, and improved net margins over time.
Integration with healthcare providers (e.g., hospital partnerships, insurance reimbursement, and Owlet Connect enterprise data platform) opens access to larger institutional markets and insurance channels, which could accelerate revenue scale and earnings growth as preventative pediatric monitoring gains clinical acceptance.
Strengthening regulatory acceptance and product differentiation, as seen in FDA/CE clearances and dominant category leadership, supports future market expansion and pricing power, which should improve revenue durability and margins as the industry evolves.

Owlet Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Owlet's revenue will grow by 23.0% annually over the next 3 years.
Analysts assume that profit margins will increase from -52.2% today to 2.7% in 3 years time.
Analysts expect earnings to reach $4.4 million (and earnings per share of $0.19) by about September 2028, up from $-46.9 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 74.6x on those 2028 earnings, up from -2.7x today. This future PE is greater than the current PE for the US Medical Equipment industry at 28.6x.
Analysts expect the number of shares outstanding to grow by 6.29% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.81%, as per the Simply Wall St company report.

Owlet Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistently slow progress and inconsequential revenue from the healthcare channel, especially regarding insurance reimbursement and hospital adoption, signals a risk that this strategic pillar may not materially contribute to revenue growth or diversify earnings in the long term.
The company faces continued exposure to rising international tariffs (Vietnam: 20%, Thailand: 19%), which are expected to significantly impact gross margins going forward; the inability to fully offset these costs, or successful execution on sourcing diversification, could compress margins and dampen net earnings.
Owlet's dependence on a relatively narrow product portfolio, dominated by Dream Sock and Dream Duo, increases vulnerability to potential regulatory, clinical, or competitive shocks that could undermine core revenue and future earnings stability.
The lengthy sales cycle, technical integration requirements, and complex contracting processes with hospitals and healthcare systems create significant barriers to rapid penetration in the institutional market, delaying anticipated scale-up and limiting near
to mid-term revenue contribution from this segment.
Slower-than-expected timeline and uncertainty regarding the rollout and adoption of new services (such as telehealth and international expansion of subscriptions) introduces execution risk and could impede subscriber growth and lifetime value expansion, affecting both top line and ARPU growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $13.2 for Owlet 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 $15.0, and the most bearish reporting a price target of just $11.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $167.1 million, earnings will come to $4.4 million, and it would be trading on a PE ratio of 74.6x, assuming you use a discount rate of 7.8%.
Given the current share price of $7.54, the analyst price target of $13.2 is 42.9% higher.
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.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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