Analysts Just Published A Bright New Outlook For SomnoMed Limited's (ASX:SOM)

Celebrations may be in order for SomnoMed Limited (ASX:SOM) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance.

Following the upgrade, the consensus from twin analysts covering SomnoMed is for revenues of AU$52m in 2020, implying a considerable 18% decline in sales compared to the last 12 months. After this upgrade, the company is anticipated to report a loss of AU$0.028 in 2020, a sharp decline from a profit over the last year. Yet before this consensus update, the analysts had been forecasting revenues of AU$46m and losses of AU$0.10 per share in 2020. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

Check out our latest analysis for SomnoMed

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with the forecast 18% revenue decline a notable change from historical growth of 12% 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 16% annually for the foreseeable future. It's pretty clear that SomnoMed's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around SomnoMed's prospects. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. More bullish expectations could be a signal for investors to take a closer look at SomnoMed.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 4 potential risks with SomnoMed, including dilutive stock issuance over the past year. You can learn more, and discover the 3 other risks we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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