Talkspace, Inc. (NASDAQ:TALK) Just Reported And Analysts Have Been Cutting Their Estimates

As you might know, Talkspace, Inc. (NASDAQ:TALK) recently reported its annual numbers. The statutory results were not great - while revenues of US$114m were in line with expectations,Talkspace lost US$0.72 a share in the process. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Talkspace after the latest results.

Check out our latest analysis for Talkspace

Taking into account the latest results, the most recent consensus for Talkspace from five analysts is for revenues of US$138.2m in 2022 which, if met, would be a substantial 22% increase on its sales over the past 12 months. Losses are forecast to balloon 47% to US$0.61 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$148.0m and losses of US$0.49 per share in 2022. While this year's revenue estimates dropped there was also a very substantial increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The average price target fell 9.3% to US$2.81, implicitly signalling that lower earnings per share are a leading indicator for Talkspace'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. There are some variant perceptions on Talkspace, with the most bullish analyst valuing it at US$4.00 and the most bearish at US$2.00 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.

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. It's pretty clear that there is an expectation that Talkspace's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 22% growth on an annualised basis. This is compared to a historical growth rate of 41% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.4% annually. Even after the forecast slowdown in growth, it seems obvious that Talkspace is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Talkspace. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Talkspace's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Talkspace going out to 2024, and you can see them free on our platform here.

You still need to take note of risks, for example - Talkspace has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

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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.