Some Avanos Medical, Inc. (NYSE:AVNS) Analysts Just Made A Major Cut To Next Year's Estimates

The analysts covering Avanos Medical, Inc. (NYSE:AVNS) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, the four analysts covering Avanos Medical provided consensus estimates of US$682m revenue in 2023, which would reflect a chunky 17% decline on its sales over the past 12 months. Following this this downgrade, earnings are now expected to tip over into loss-making territory, with the analysts forecasting losses of US$0.91 per share in 2023. Previously, the analysts had been modelling revenues of US$763m and earnings per share (EPS) of US$1.08 in 2023. So we can see that the consensus has become notably more bearish on Avanos Medical's outlook with these numbers, making a substantial drop in this year's revenue estimates. Furthermore, they expect the business to be loss-making this year, compared to their previous forecasts of a profit.

View our latest analysis for Avanos Medical

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with a forecast 31% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 4.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.9% annually for the foreseeable future. It's pretty clear that Avanos Medical's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts are expecting Avanos Medical to become unprofitable this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the serious cut to this year's outlook, it's clear that analysts have turned more bearish on Avanos Medical, and we wouldn't blame shareholders for feeling a little more cautious themselves.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Avanos Medical analysts - going out to 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.