Yahoo Finance Analysts Are More Bearish On Ontrak, Inc. (NASDAQ:OTRK) Than They Used To Be
The latest analyst coverage could presage a bad day for Ontrak, Inc. (NASDAQ:OTRK), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.
Following the downgrade, the consensus from seven analysts covering Ontrak is for revenues of US$84m in 2021, implying a not inconsiderable 15% decline in sales compared to the last 12 months. Losses are supposed to balloon 69% to US$2.42 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of US$97m and losses of US$1.69 per share in 2021. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
View our latest analysis for Ontrak
The consensus price target fell 8.1% to US$42.29, implicitly signalling that lower earnings per share are a leading indicator for Ontrak's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Ontrak at US$58.00 per share, while the most bearish prices it at US$32.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying 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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 19% by the end of 2021. This indicates a significant reduction from annual growth of 59% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.8% per year. It's pretty clear that Ontrak's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Ontrak's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Ontrak.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Ontrak analysts - going out to 2025, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
This article by Simply Wall St is general in nature. 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.
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