DarioHealth Corp. (NASDAQ:DRIO) Consensus Forecasts Have Become A Little Darker Since Its Latest Report

Shareholders might have noticed that DarioHealth Corp. (NASDAQ:DRIO) filed its second-quarter result this time last week. The early response was not positive, with shares down 8.7% to US$3.16 in the past week. The results don't look great, especially considering that statutory losses grew 11% toUS$0.58 per share. Revenues of US$6,152,000 did beat expectations by 2.3%, but it looks like a bit of a cold comfort. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for DarioHealth

After the latest results, the consensus from DarioHealth's five analysts is for revenues of US$24.7m in 2023, which would reflect a noticeable 7.2% decline in revenue compared to the last year of performance. Losses are expected to increase slightly, to US$2.18 per share. Before this latest report, the consensus had been expecting revenues of US$28.2m and US$1.86 per share in losses. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.

The consensus price target fell 7.9% to US$8.62, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic DarioHealth analyst has a price target of US$13.00 per share, while the most pessimistic values it at US$4.10. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 14% by the end of 2023. This indicates a significant reduction from annual growth of 35% 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 7.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - DarioHealth is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for DarioHealth going out to 2025, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 3 warning signs for DarioHealth you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.