Need To Know: Analysts Just Made A Substantial Cut To Their DarioHealth Corp. (NASDAQ:DRIO) Estimates

The latest analyst coverage could presage a bad day for DarioHealth Corp. (NASDAQ:DRIO), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the five analysts covering DarioHealth, is for revenues of US$25m in 2023, which would reflect a noticeable 7.2% reduction in DarioHealth's sales over the past 12 months. Per-share losses are expected to creep up to US$2.18. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$28m and losses of US$1.86 per share in 2023. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for DarioHealth

The consensus price target fell 7.9% to US$8.62, implicitly signalling that lower earnings per share are a leading indicator for DarioHealth's valuation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with a forecast 14% annualised revenue decline to the end of 2023. That is a notable change from historical 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 analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that DarioHealth's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of DarioHealth.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple DarioHealth analysts - going out to 2025, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.