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    The Market Doesn't Like What It Sees From Outset Medical, Inc.'s (NASDAQ:OM) Revenues Yet As Shares Tumble 27%

    Simply Wall St·12/19/2025 11:14:46
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    Unfortunately for some shareholders, the Outset Medical, Inc. (NASDAQ:OM) share price has dived 27% in the last thirty days, prolonging recent pain. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 78% loss during that time.

    After such a large drop in price, Outset Medical may be sending very bullish signals at the moment with its price-to-sales (or "P/S") ratio of 0.5x, since almost half of all companies in the Medical Equipment industry in the United States have P/S ratios greater than 3.1x and even P/S higher than 9x are not unusual. However, the P/S might be quite low for a reason and it requires further investigation to determine if it's justified.

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    Check out our latest analysis for Outset Medical

    ps-multiple-vs-industry
    NasdaqGS:OM Price to Sales Ratio vs Industry December 19th 2025

    How Outset Medical Has Been Performing

    With revenue growth that's inferior to most other companies of late, Outset Medical has been relatively sluggish. The P/S ratio is probably low because investors think this lacklustre revenue performance isn't going to get any better. If you still like the company, you'd be hoping revenue doesn't get any worse and that you could pick up some stock while it's out of favour.

    Keen to find out how analysts think Outset Medical's future stacks up against the industry? In that case, our free report is a great place to start.

    What Are Revenue Growth Metrics Telling Us About The Low P/S?

    The only time you'd be truly comfortable seeing a P/S as depressed as Outset Medical's is when the company's growth is on track to lag the industry decidedly.

    Retrospectively, the last year delivered a decent 4.7% gain to the company's revenues. The latest three year period has also seen a 7.7% overall rise in revenue, aided somewhat by its short-term performance. So we can start by confirming that the company has actually done a good job of growing revenue over that time.

    Looking ahead now, revenue is anticipated to climb by 9.1% per annum during the coming three years according to the four analysts following the company. Meanwhile, the rest of the industry is forecast to expand by 121% per year, which is noticeably more attractive.

    In light of this, it's understandable that Outset Medical's P/S sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

    What Does Outset Medical's P/S Mean For Investors?

    Shares in Outset Medical have plummeted and its P/S has followed suit. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

    As expected, our analysis of Outset Medical's analyst forecasts confirms that the company's underwhelming revenue outlook is a major contributor to its low P/S. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

    There are also other vital risk factors to consider and we've discovered 4 warning signs for Outset Medical (2 are significant!) that you should be aware of before investing here.

    If these risks are making you reconsider your opinion on Outset Medical, explore our interactive list of high quality stocks to get an idea of what else is out there.