Shareholders in The Beauty Health Company (NASDAQ:SKIN) had a terrible week, as shares crashed 28% to US$10.60 in the week since its latest quarterly results. In addition to beating expectations by 11% with revenues of US$75m, Beauty Health delivered a surprise (statutory) profit of US$0.22 per share, a sweet improvement compared to the losses that the analysts forecast. 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.
Taking into account the latest results, the most recent consensus for Beauty Health from eleven analysts is for revenues of US$327.2m in 2022 which, if met, would be a decent 14% increase on its sales over the past 12 months. Earnings are expected to improve, with Beauty Health forecast to report a statutory profit of US$0.044 per share. In the lead-up to this report, the analysts had been modelling revenues of US$327.3m and earnings per share (EPS) of US$0.044 in 2022. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target fell 12% to US$24.67, suggesting that the analysts might have been a bit enthusiastic in their previous valuation - or they were expecting the company to provide stronger guidance in the quarterly results. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Beauty Health analyst has a price target of US$35.00 per share, while the most pessimistic values it at US$18.00. 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 pretty clear that there is an expectation that Beauty Health's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 19% growth on an annualised basis. This is compared to a historical growth rate of 115% 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) 9.7% per year. Even after the forecast slowdown in growth, it seems obvious that Beauty Health is also expected to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still 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 Beauty Health's future valuation.
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 Beauty Health analysts - going out to 2024, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for Beauty Health you should know about.
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.