Analysts Just Shaved Their Pulmonx Corporation (NASDAQ:LUNG) Forecasts Dramatically

Market forces rained on the parade of Pulmonx Corporation (NASDAQ:LUNG) shareholders today, when the analysts downgraded their forecasts for next year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the seven analysts covering Pulmonx are now predicting revenues of US$63m in 2023. If met, this would reflect a sizeable 21% improvement in sales compared to the last 12 months. Losses are expected to increase slightly, to US$1.67 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$79m and losses of US$1.36 per share in 2023. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

Check out the opportunities and risks within the US Medical Equipment industry.

The consensus price target fell 38% to US$14.64, implicitly signalling that lower earnings per share are a leading indicator for Pulmonx's valuation. 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 Pulmonx, with the most bullish analyst valuing it at US$19.00 and the most bearish at US$13.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Pulmonx shareholders.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Pulmonx's revenue growth is expected to slow, with the forecast 16% annualised growth rate until the end of 2023 being well below the historical 21% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.5% per year. Even after the forecast slowdown in growth, it seems obvious that Pulmonx is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Pulmonx.

That said, the analysts might have good reason to be negative on Pulmonx, given recent substantial insider selling. For more information, you can click here to discover this and the 2 other flags we've identified.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.