Stock Analysis

Analysts Have Been Trimming Their Acutus Medical, Inc. (NASDAQ:AFIB) Price Target After Its Latest Report

OTCPK:AFIB
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It's been a pretty great week for Acutus Medical, Inc. (NASDAQ:AFIB) shareholders, with its shares surging 15% to US$13.65 in the week since its latest quarterly results. Revenues were 29% better than analyst models forecast, at US$3.6m. Perhaps unsurprisingly, statutory losses were also slightly larger than expected, at US$1.04 per share, reflecting the higher costs which were likely incurred in generating that revenue. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Acutus Medical

earnings-and-revenue-growth
NasdaqGS:AFIB Earnings and Revenue Growth May 15th 2021

Taking into account the latest results, the consensus forecast from Acutus Medical's five analysts is for revenues of US$24.7m in 2021, which would reflect a major 136% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 39% to US$3.79. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$24.5m and losses of US$2.85 per share in 2021. While this year's revenue estimates held steady, there was also a very substantial increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The consensus price target fell 11% to US$18.75per share, with the analysts clearly concerned by ballooning losses. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Acutus Medical at US$26.00 per share, while the most bearish prices it at US$11.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2021 brings more of the same, according to the analysts, with revenue forecast to display 215% growth on an annualised basis. That is in line with its 188% annual growth over the past year. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 7.9% annually. So it's pretty clear that Acutus Medical is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Acutus Medical. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Acutus Medical. Long-term earnings power is much more important than next year's profits. We have forecasts for Acutus Medical going out to 2023, and you can see them free on our platform here.

Even so, be aware that Acutus Medical is showing 3 warning signs in our investment analysis , and 1 of those is potentially serious...

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This article by Simply Wall St is general in nature. 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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