US$3.50: That's What Analysts Think Talkspace, Inc. (NASDAQ:TALK) Is Worth After Its Latest Results

It's been a sad week for Talkspace, Inc. (NASDAQ:TALK), who've watched their investment drop 12% to US$1.65 in the week since the company reported its quarterly result. Results were overall in line with expectations, with the company breaking even at the statutory earnings per share (EPS) level on US$46m in revenue. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Talkspace

Taking into account the latest results, the most recent consensus for Talkspace from three analysts is for revenues of US$190.9m in 2024. If met, it would imply a notable 11% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 89% to US$0.005. Before this latest report, the consensus had been expecting revenues of US$189.1m and US$0.0037 per share in losses. While this year's revenue estimates held steady, there was also a sizeable expansion in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The consensus price target fell 13% to US$3.50per share, with the analysts clearly concerned by ballooning losses. 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 Talkspace, with the most bullish analyst valuing it at US$5.00 and the most bearish at US$2.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the 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 clear from the latest estimates that Talkspace's rate of growth is expected to accelerate meaningfully, with the forecast 22% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 15% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.8% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Talkspace is expected to grow much faster than its 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. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Talkspace. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Talkspace analysts - going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Talkspace that you need to be mindful 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.