These Analysts Think Cue Health Inc.'s (NASDAQ:HLTH) Sales Are Under Threat

The analysts covering Cue Health Inc. (NASDAQ:HLTH) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the latest downgrade, the current consensus, from the four analysts covering Cue Health, is for revenues of US$65m in 2023, which would reflect a painful 74% reduction in Cue Health's sales over the past 12 months. Losses are expected to increase substantially, hitting US$2.11 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$77m and losses of US$1.96 per share in 2023. 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 expecting losses per share to increase.

Check out our latest analysis for Cue Health

The consensus price target fell 6.0% to US$3.94, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.

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. One more thing stood out to us about these estimates, and it's the idea that Cue Health's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 93% to the end of 2023. This tops off a historical decline of 63% a year over the past year. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 7.9% 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 most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Cue Health. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Cue Health's future valuation. 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 Cue Health after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Cue Health, including dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other risks we've identified.

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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.