The analysts might have been a bit too bullish on The Beauty Health Company (NASDAQ:SKIN), given that the company fell short of expectations when it released its second-quarter results last week. Revenues missed expectations somewhat, coming in at US$91m, but statutory earnings fell catastrophically short, with a loss of US$0.10 some 100% larger than what the analysts had predicted. 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, Beauty Health's twelve analysts currently expect revenues in 2024 to be US$367.0m, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 80% to US$0.13. Before this earnings announcement, the analysts had been modelling revenues of US$391.8m and losses of US$0.06 per share in 2024. So it's pretty clear the analysts have mixed opinions on Beauty Health after this update; revenues were downgraded and per-share losses expected to increase.
The consensus price target fell 22% to US$2.34, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. 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 Beauty Health, with the most bullish analyst valuing it at US$5.00 and the most bearish at US$1.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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. 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 2024 expected to display 0.4% growth on an annualised basis. This is compared to a historical growth rate of 20% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.3% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Beauty Health.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Beauty Health. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse 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 2026, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Beauty Health .
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
