One thing we could say about the analysts on Neuronetics, Inc. (NASDAQ:STIM) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the current consensus from Neuronetics' four analysts is for revenues of US$77m in 2025 which - if met - would reflect a credible 5.9% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 44% to US$0.67 per share. Yet before this consensus update, the analysts had been forecasting revenues of US$87m and losses of US$0.63 per share in 2025. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

View our latest analysis for Neuronetics

The consensus price target fell 20% to US$2.67, implicitly signalling that lower earnings per share are a leading indicator for Neuronetics' valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Neuronetics' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Neuronetics' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 4.7% growth on an annualised basis. This is compared to a historical growth rate of 6.2% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.2% annually. Factoring in the forecast slowdown in growth, it seems obvious that Neuronetics is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Neuronetics' revenues are expected to grow slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Neuronetics' future valuation. Overall, given the drastic downgrade to next year's forecasts, we'd be feeling a little more wary of Neuronetics going forwards.

That said, the analysts might have good reason to be negative on Neuronetics, given dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other warning signs we've identified.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies backed by insiders.

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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.