Connected Health Trends Will Drive Global Infant Monitoring Expansion

Key Takeaways

• Explosive international growth and strong adoption position Owlet as the leading brand in connected baby monitoring, with substantial potential for outsized revenue and margin expansion.
  
• Advanced tech, hospital integration, and premium services could drive high-margin B2B revenue streams and unlock major long-term value from both consumers and healthcare partners.
  
• Persistent margin pressures, high costs, regulatory hurdles, and reliance on consumer sales limit diversification and growth, increasing risk as competition and economic headwinds intensify.

Catalysts

Provides digital parenting solutions in the United States, the United Kingdom, and internationally.

• While analyst consensus expects global regulatory clearance of Dream Sock and BabySat to drive meaningful international growth, this might significantly understate potential; with early signs of explosive sell-through in European markets and leading Amazon rankings, Owlet could rapidly become the undisputed category leader abroad, multiplying international revenues and accelerating operating leverage far beyond current forecasts.
  
• Analysts broadly agree that subscription services like Owlet360 will boost recurring revenues and margins, but this may be conservative; the rapid adoption rate, strong retention and cross-selling potential point to an opportunity for Owlet to unlock a much larger lifetime value per family-potentially capturing a dominant share of parental spend on pediatric health across multiple years and driving sustained double-digit margin expansion.
  
• The move to real-time data integration with hospitals through Owlet Connect positions the company at the forefront of remote pediatric care, enabling access to large-scale hospital contracts and health system partnerships-a development with the potential to transform B2B revenue streams and gross profit as hospitals adopt standardized post-discharge monitoring.
  
• Industry-wide advances in biosensor technology, AI-driven analytics and proprietary data now place Owlet in a prime position to launch differentiated, next-generation products and services that can command premium pricing and potentially create high-margin, recurring software and data licensing revenue.
  
• Heightened focus by parents and health authorities on preventative, home-based infant health monitoring is just beginning to reshape consumer and institutional purchase behavior; as the default brand and gold-standard for connected baby monitoring, Owlet could see a structural uplift in baseline demand, producing multi-year outsized revenue and earnings growth ahead of the market.

Owlet Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Owlet compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Owlet's revenue will grow by 21.8% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -52.2% today to 0.6% in 3 years time.
• The bullish analysts expect earnings to reach $989.7 thousand (and earnings per share of $0.44) by about August 2028, up from $-46.9 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 379.8x 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 27.8x.
• 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

• Ongoing and increased tariffs on key manufacturing countries such as Vietnam and Thailand are expected to result in a five percent hit to gross margin in future quarters, with further uncertainty depending on shifting tariff policies, which may continue to negatively impact net margins and operating profit.
  
• Slow progress in expanding healthcare channel revenues, including minimal current healthcare revenue and protracted hospital contract cycles, suggests that diversification beyond consumer product sales faces regulatory and adoption hurdles, risking long-term revenue growth and exposing the business to greater dependence on a narrow product line.
  
• Rising operating expenses, which increased from $12.5 million to $15.3 million year-over-year even as a percentage of revenue remains high, combined with low actual net profitability and continued net losses after adjustments, create risk that future earnings will not materialize and could lead to further dilution for shareholders or expensive financing needs.
  
• The company's reliance on consumer demand for premium-priced pediatric monitors may expose Owlet to vulnerability if economic inequality worsens or if insurance reimbursement expansion is slow, potentially capping addressable market size and constraining top-line revenue growth.
  
• Regulatory hurdles, slow hospital integration cycles, and the increasing need to invest in large-scale clinical studies for clinical validation mean that increased compliance costs and delayed product launches could materially increase R&D expenses and compress net earnings, especially as larger established competitors enter the pediatric health platform space.

Valuation

• The assumed bullish price target for Owlet is $15.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Owlet's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• 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 bullish analysts, you'd need to believe that by 2028, revenues will be $162.3 million, earnings will come to $989.7 thousand, and it would be trading on a PE ratio of 379.8x, assuming you use a discount rate of 7.8%.
• Given the current share price of $7.31, the bullish analyst price target of $15.0 is 51.3% 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.