Need To Know: The Consensus Just Cut Its DarioHealth Corp. (NASDAQ:DRIO) Estimates For 2022

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. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the most recent consensus for DarioHealth from its seven analysts is for revenues of US$28m in 2022 which, if met, would be a reasonable 7.4% increase on its sales over the past 12 months. Losses are presumed to reduce, shrinking 12% from last year to US$3.10. However, before this estimates update, the consensus had been expecting revenues of US$34m and US$3.10 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also making no real change to the loss per share numbers.

View our latest analysis for DarioHealth

the analysts have cut their price target 16% to US$15.39 per share, signalling that the declining revenue and ongoing losses are contributing to the lower valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic DarioHealth analyst has a price target of US$29.00 per share, while the most pessimistic values it at US$9.15. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be possible to derive much meaning from the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the DarioHealth's past performance and to peers in the same industry. We would highlight that DarioHealth's revenue growth is expected to slow, with the forecast 15% annualised growth rate until the end of 2022 being well below the historical 34% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.9% annually. So it's pretty clear that, while DarioHealth's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on DarioHealth after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple DarioHealth analysts - going out to 2024, and you can see them 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 downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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