The Beauty Health Company (NASDAQ:SKIN) shareholders are probably feeling a little disappointed, since its shares fell 4.5% to US$13.85 in the week after its latest second-quarter results. In addition to smashing expectations with revenues of US$104m, Beauty Health delivered a surprise statutory profit of US$0.05 per share, a notable improvement compared to analyst expectations of a loss. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Beauty Health

Taking into account the latest results, the consensus forecast from Beauty Health’s eleven analysts is for revenues of US$349.4m in 2022, which would reflect a credible 7.5% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Beauty Health forecast to report a statutory profit of US$0.26 per share. Before this earnings report, the analysts had been forecasting revenues of US$337.4m and earnings per share (EPS) of US$0.21 in 2022. There’s been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a very substantial lift in earnings per share in particular.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$21.78, suggesting that the forecast performance does not have a long term impact on the company’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. There are some variant perceptions on Beauty Health, with the most bullish analyst valuing it at US$25.00 and the most bearish at US$18.00 per share. This shows there is still a bit of diversity in estimates, but analysts don’t appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. 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 2022 expected to display 16% growth on an annualised basis. This is compared to a historical growth rate of 74% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.0% per year. Even after the forecast slowdown in growth, it seems obvious that Beauty Health is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Beauty Health following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at US$21.78, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn’t be too quick to come to a conclusion on Beauty Health. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Beauty Health going out to 2024, and you can see them free on our platform here..

Don’t forget that there may still be risks. For instance, we’ve identified 1 warning sign for Beauty Health that you should be aware of.

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.

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