Analysts Have Just Cut Their OraSure Technologies, Inc. (NASDAQ:OSUR) Revenue Estimates By 12%

One thing we could say about the analysts on OraSure Technologies, Inc. (NASDAQ:OSUR) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After the downgrade, the consensus from OraSure Technologies' six analysts is for revenues of US$321m in 2023, which would reflect a stressful 32% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to crater 43% to US$0.22 in the same period. Prior to this update, the analysts had been forecasting revenues of US$366m and earnings per share (EPS) of US$0.23 in 2023. It looks like analyst sentiment has fallen somewhat in this update, with a measurable cut to revenue estimates and a small dip in earnings per share numbers as well.

View our latest analysis for OraSure Technologies

What's most unexpected is that the consensus price target rose 9.0% to US$6.95, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip. 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. Currently, the most bullish analyst values OraSure Technologies at US$7.50 per share, while the most bearish prices it at US$6.50. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting OraSure Technologies is an easy business to forecast or the underlying assumptions are obvious.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 41% by the end of 2023. This indicates a significant reduction from annual growth of 20% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 8.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - OraSure Technologies is expected to lag the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for OraSure Technologies. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that OraSure Technologies' revenues are expected to grow slower than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. 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 OraSure Technologies after today.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with OraSure Technologies' business, like dilutive stock issuance over the past year. Learn more, and discover the 1 other warning sign we've identified, for free on our platform here.

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.

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