Analysts Have Just Cut Their Sonendo, Inc. (NYSE:SONX) Revenue Estimates By 18%

The latest analyst coverage could presage a bad day for Sonendo, Inc. (NYSE:SONX), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Shares are up 5.8% to US$0.29 in the past week. Investors could be forgiven for changing their mind on the business following the downgrade; but it's not clear if the revised forecasts will lead to selling activity.

Following the downgrade, the most recent consensus for Sonendo from its five analysts is for revenues of US$49m in 2024 which, if met, would be a solid 11% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 61% to US$0.46. Yet before this consensus update, the analysts had been forecasting revenues of US$60m and losses of US$0.49 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also reducing the estimated losses the business will incur.

Check out our latest analysis for Sonendo

There was no major change to the US$1.99 average analyst price target, suggesting that the adjustments to revenue and earnings are not expected to have a long-term impact on the business.

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 Sonendo's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 8.3% growth on an annualised basis. This is compared to a historical growth rate of 21% over the past three years. Compare this to the 284 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 7.7% per year. Factoring in the forecast slowdown in growth, it looks like Sonendo is forecast to grow at about the same rate as the wider industry.

The Bottom Line

Lamentably, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the market itself. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Sonendo after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Sonendo, including dilutive stock issuance over the past year. Learn more, and discover the 3 other risks we've identified, for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies 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.