Analysts Have Lowered Expectations For ReShape Lifesciences Inc. (NASDAQ:RSLS) After Its Latest Results

It's shaping up to be a tough period for ReShape Lifesciences Inc. (NASDAQ:RSLS), which a week ago released some disappointing yearly results that could have a notable impact on how the market views the stock. It was a pretty negative result overall, with revenues of US$14m missing analyst predictions by 4.3%. Worse, the business reported a statutory loss of US$5.00 per share, much larger than the analysts had forecast prior to the result. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on ReShape Lifesciences after the latest results.

View our latest analysis for ReShape Lifesciences

Taking into account the latest results, the current consensus from ReShape Lifesciences' two analysts is for revenues of US$18.9m in 2022, which would reflect a huge 39% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 67% to US$1.17. Before this latest report, the consensus had been expecting revenues of US$20.6m and US$0.68 per share in losses. So it's pretty clear the analysts have mixed opinions on ReShape Lifesciences after this update; revenues were downgraded and per-share losses expected to increase.

The average price target fell 48% to US$4.75, implicitly signalling that lower earnings per share are a leading indicator for ReShape Lifesciences' valuation.

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 would highlight that ReShape Lifesciences' revenue growth is expected to slow, with the forecast 39% annualised growth rate until the end of 2022 being well below the historical 50% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.0% annually. So it's pretty clear that, while ReShape Lifesciences' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that ReShape Lifesciences' revenues are expected 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.

However, before you get too enthused, we've discovered 4 warning signs for ReShape Lifesciences (1 shouldn't be ignored!) that you should be aware of.

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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.