Analysts Have Been Trimming Their Spectral AI, Inc. (NASDAQ:MDAI) Price Target After Its Latest Report

It's been a pretty great week for Spectral AI, Inc. (NASDAQ:MDAI) shareholders, with its shares surging 12% to US$1.58 in the week since its latest quarterly results. Spectral AI beat revenue forecasts by a solid 17%, hitting US$7.5m. Statutory losses also increased, with a per-share loss of US$0.16, slightly larger than what the analysts wereexpecting. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Spectral AI

Taking into account the latest results, the current consensus from Spectral AI's six analysts is for revenues of US$29.3m in 2024. This would reflect a substantial 30% increase on its revenue over the past 12 months. Losses are predicted to fall substantially, shrinking 38% to US$0.72. Before this latest report, the consensus had been expecting revenues of US$28.0m and US$0.72 per share in losses.

The analysts trimmed their valuations, with the average price target falling 14% to US$5.35, with the ongoing losses clearly weighing on sentiment despite the upgraded revenue estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Spectral AI, with the most bullish analyst valuing it at US$10.60 and the most bearish at US$3.00 per share. 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 analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Spectral AI's rate of growth is expected to accelerate meaningfully, with the forecast 69% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 7.4% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.1% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Spectral AI to grow faster than the wider 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. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Spectral AI analysts - going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 4 warning signs we've spotted with Spectral AI (including 2 which don't sit too well with us) .

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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.