iRhythm Technologies, Inc. (NASDAQ:IRTC) Just Reported And Analysts Have Been Lifting Their Price Targets

A week ago, iRhythm Technologies, Inc. (NASDAQ:IRTC) came out with a strong set of second-quarter numbers that could potentially lead to a re-rate of the stock. Revenues beat expectations coming in atUS$187m, ahead of estimates by 7.3%. Statutory losses were somewhat smaller thanthe analysts expected, coming in at US$0.44 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Taking into account the latest results, the consensus forecast from iRhythm Technologies' 13 analysts is for revenues of US$723.6m in 2025. This reflects a meaningful 10% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 40% to US$1.74. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$695.8m and losses of US$1.81 per share in 2025. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for both revenues and losses per share.

See our latest analysis for iRhythm Technologies

It will come as no surprise to learn thatthe analysts have increased their price target for iRhythm Technologies 19% to US$175on the back of these upgrades. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on iRhythm Technologies, with the most bullish analyst valuing it at US$190 and the most bearish at US$147 per share. This is a very narrow spread of estimates, implying either that iRhythm Technologies is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of iRhythm Technologies'historical trends, as the 21% annualised revenue growth to the end of 2025 is roughly in line with the 20% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 8.2% per year. So it's pretty clear that iRhythm Technologies is forecast to grow substantially faster than its industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple iRhythm Technologies analysts - going out to 2027, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for iRhythm Technologies you should know about.

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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.