Sharecare, Inc. (NASDAQ:SHCR) Analysts Just Slashed This Year's Estimates

Today is shaping up negative for Sharecare, Inc. (NASDAQ:SHCR) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the downgrade, the current consensus from Sharecare's three analysts is for revenues of US$477m in 2022 which - if met - would reflect a solid 16% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 90% to US$0.025. Before this latest update, the analysts had been forecasting revenues of US$540m and earnings per share (EPS) of US$0.045 in 2022. There looks to have been a major change in sentiment regarding Sharecare's prospects, with a substantial drop in revenues and the analysts now forecasting a loss instead of a profit.

Check out our latest analysis for Sharecare

The consensus price target fell 37% to US$6.67, implicitly signalling that lower earnings per share are a leading indicator for Sharecare's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Sharecare at US$10.00 per share, while the most bearish prices it at US$4.50. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Sharecare's rate of growth is expected to accelerate meaningfully, with the forecast 16% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 5.0% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 13% annually. Sharecare is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The biggest low-light for us was that the forecasts for Sharecare dropped from profits to a loss this year. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Sharecare.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Sharecare analysts - going out to 2023, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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