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Neuronetics, Inc. (NASDAQ:STIM) Released Earnings Last Week And Analysts Lifted Their Price Target To US$5.75
A week ago, Neuronetics, Inc. (NASDAQ:STIM) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Results overall were solid, with revenues arriving 3.8% better than analyst forecasts at US$42m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.02 per share, were 3.8% smaller than the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for Neuronetics from four analysts is for revenues of US$177.0m in 2027. If met, it would imply a solid 11% increase on its revenue over the past 12 months. Losses are forecast to narrow 7.6% to US$0.28 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$177.0m and losses of US$0.28 per share in 2027.
See our latest analysis for Neuronetics
The average price target fell 28% to US$5.75, with the ongoing losses seemingly a concern for the analysts, despite the lack of real change to the earnings 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. There are some variant perceptions on Neuronetics, with the most bullish analyst valuing it at US$7.00 and the most bearish at US$5.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Neuronetics' revenue growth is expected to slow, with the forecast 8.5% annualised growth rate until the end of 2027 being well below the historical 24% p.a. growth over the last five years. Compare this to the 229 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 7.5% per year. Factoring in the forecast slowdown in growth, it looks like Neuronetics is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Neuronetics analysts - going out to 2028, 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 Neuronetics (1 can't be ignored) you should be aware of.
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