Analysts Are Updating Their Treace Medical Concepts, Inc. (NASDAQ:TMCI) Estimates After Its Second-Quarter Results

Last week saw the newest second-quarter earnings release from Treace Medical Concepts, Inc. (NASDAQ:TMCI), an important milestone in the company's journey to build a stronger business. The results don't look great, especially considering that statutory losses grew 49% toUS$0.31 per share. Revenues of US$30m did beat expectations by 4.6%, but it looks like a bit of a cold comfort. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 Treace Medical Concepts

Taking into account the latest results, the consensus forecast from Treace Medical Concepts' four analysts is for revenues of US$132.3m in 2022, which would reflect a notable 16% improvement in sales compared to the last 12 months. Per-share losses are expected to explode, reaching US$0.90 per share. Before this latest report, the consensus had been expecting revenues of US$131.1m and US$0.67 per share in losses. So it's pretty clear the analysts have mixed opinions on Treace Medical Concepts even after this update; although they reconfirmed their revenue numbers, it came at the cost of a very substantial increase in per-share losses.

As a result, there was no major change to the consensus price target of US$26.75, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Treace Medical Concepts analyst has a price target of US$37.00 per share, while the most pessimistic values it at US$23.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Treace Medical Concepts' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 35% growth on an annualised basis. This is compared to a historical growth rate of 47% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.9% per year. So it's pretty clear that, while Treace Medical Concepts' 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 note is the forecast of increased losses next year, suggesting all may not be well at Treace Medical Concepts. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$26.75, with the latest estimates not enough to have an impact on their price targets.

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 estimates - from multiple Treace Medical Concepts analysts - going out to 2024, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Treace Medical Concepts that you should be aware 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.