Time To Worry? Analysts Just Downgraded Their DarioHealth Corp. (NASDAQ:DRIO) Outlook

One thing we could say about the analysts on DarioHealth Corp. (NASDAQ:DRIO) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After this downgrade, DarioHealth's five analysts are now forecasting revenues of US$31m in 2024. This would be a major 30% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 26% to US$1.64. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$35m and losses of US$1.64 per share in 2024. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to next year's revenue estimates, while at the same time holding losses per share steady.

View our latest analysis for DarioHealth

The consensus price target fell 9.2% to US$7.10, with the analysts clearly concerned about the weaker revenue outlook and expectation of ongoing losses.

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 23% annualised growth rate until the end of 2024 being well below the historical 34% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 11% per year. 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

Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to 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. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on DarioHealth after today.

That said, the analysts might have good reason to be negative on DarioHealth, given dilutive stock issuance over the past year. Learn more, and discover the 3 other risks we've identified, for 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.

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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.