One thing we could say about the analysts on Outset Medical, Inc. (NASDAQ:OM) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

Following the downgrade, the consensus from eight analysts covering Outset Medical is for revenues of US$110m in 2024, implying a measurable 5.3% decline in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 26% to US$2.27. However, before this estimates update, the consensus had been expecting revenues of US$146m and US$1.99 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Outset Medical

The consensus price target fell 37% to US$3.63, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 10% by the end of 2024. This indicates a significant reduction from annual growth of 12% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 8.1% annually for the foreseeable future. It's pretty clear that Outset Medical'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 Outset Medical's revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Outset Medical, including recent substantial insider selling. For more information, you can click here to discover this and the 4 other warning signs we've identified.