Revenue Downgrade: Here's What Analysts Forecast For Cue Health Inc. (NASDAQ:HLTH)

The latest analyst coverage could presage a bad day for Cue Health Inc. (NASDAQ:HLTH), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the consensus from four analysts covering Cue Health is for revenues of US$95m in 2023, implying a stressful 71% decline in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$115m of revenue in 2023. The consensus view seems to have become more pessimistic on Cue Health, noting the substantial drop in revenue estimates in this update.

Check out our latest analysis for Cue Health

We'd point out that there was no major changes to their price target of US$5.19, suggesting the latest estimates were not enough to shift their view on the value of the business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Cue Health at US$8.00 per share, while the most bearish prices it at US$2.75. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. Over the past year, revenues have declined around 55% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 81% decline in revenue until the end of 2023. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 8.3% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Cue Health to suffer worse than the wider industry.

The Bottom Line

The clear low-light was that analysts slashing their revenue forecasts for Cue Health this year. They're also anticipating slower revenue growth than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Cue Health going forwards.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Cue Health's financials, such as dilutive stock issuance over the past year. Learn more, and discover the 4 other warning signs 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.