The latest analyst coverage could presage a bad day for Semler Scientific, Inc. (NASDAQ:SMLR), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
Following the downgrade, the current consensus from Semler Scientific's three analysts is for revenues of US$59m in 2022 which - if met - would reflect a meaningful 12% increase on its sales over the past 12 months. Statutory earnings per share are supposed to tumble 27% to US$1.86 in the same period. Prior to this update, the analysts had been forecasting revenues of US$68m and earnings per share (EPS) of US$2.73 in 2022. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.
It'll come as no surprise then, to learn that the analysts have cut their price target 48% to US$86.67. 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 Semler Scientific, with the most bullish analyst valuing it at US$145 and the most bearish at US$90.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Semler Scientific's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 12% growth on an annualised basis. This is compared to a historical growth rate of 34% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.9% annually. So it's pretty clear that, while Semler Scientific's 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 analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than 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 Semler Scientific.
As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Semler Scientific's financials, such as concerns around earnings quality. For more information, you can click here to discover this and the 1 other flag we've identified.
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