Tactile Systems Technology, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Shareholders might have noticed that Tactile Systems Technology, Inc. (NASDAQ:TCMD) filed its yearly result this time last week. The early response was not positive, with shares down 7.5% to US$14.13 in the past week. Revenues were US$274m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$1.23 were also better than expected, beating analyst predictions by 11%. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Tactile Systems Technology

After the latest results, the four analysts covering Tactile Systems Technology are now predicting revenues of US$302.9m in 2024. If met, this would reflect a meaningful 10% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to nosedive 53% to US$0.57 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$309.2m and earnings per share (EPS) of US$0.49 in 2024. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the substantial gain in to the earnings per share numbers.

The consensus price target fell 14% to US$20.67, with the analysts signalling that the weaker revenue outlook was a more powerful indicator than the upgraded EPS forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Tactile Systems Technology at US$25.00 per share, while the most bearish prices it at US$17.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Tactile Systems Technology shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Tactile Systems Technology'shistorical trends, as the 10% annualised revenue growth to the end of 2024 is roughly in line with the 11% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 7.8% annually. So although Tactile Systems Technology is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Tactile Systems Technology's earnings potential next year. They also downgraded Tactile Systems Technology's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Still, earnings per share are more important to value creation for shareholders. 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.

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. At Simply Wall St, we have a full range of analyst estimates for Tactile Systems Technology going out to 2025, 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 Tactile Systems Technology 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.