DarioHealth Corp. (NASDAQ:DRIO) Just Reported Earnings, And Analysts Cut Their Target Price

One of the biggest stories of last week was how DarioHealth Corp. (NASDAQ:DRIO) shares plunged 47% in the week since its latest third-quarter results, closing yesterday at US$1.26. Revenues of US$5.3m arrived in line with expectations, although statutory losses per share were US$0.73, an impressive 23% smaller than what broker models 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. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on DarioHealth after the latest results.

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After the latest results, the six analysts covering DarioHealth are now predicting revenues of US$29.1m in 2027. If met, this would reflect a substantial 37% improvement in revenue compared to the last 12 months. Losses are forecast to balloon 234% to US$2.24 per share. Before this latest report, the consensus had been expecting revenues of US$29.5m and US$2.25 per share in losses.

Check out our latest analysis for DarioHealth

The analysts trimmed their valuations, with the average price target falling 34% to US$8.20, with the ongoing losses seemingly weighing on sentiment, despite no real changes to the earnings forecasts. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. Currently, the most bullish analyst values DarioHealth at US$12.00 per share, while the most bearish prices it at US$5.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. For example, we noticed that DarioHealth’s rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 28% growth to the end of 2027 on an annualised basis. That is well above its historical decline of 0.3% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 11% per year. Not only are DarioHealth’s revenues expected to improve, it seems that the analysts are also expecting it to grow faster than 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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. We have forecasts for DarioHealth going out to 2028, and you can see them free on our platform here.

You still need to take note of risks, for example – DarioHealth has 4 warning signs (and 2 which don’t sit too well with us) we think you should know about.

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