Outset Medical Inc stock was downgraded by BofA Securities analysts to ‘Underperform’ from ‘Buy’, and its price objective was cut to $3 per share from $32, after the medical technology company reported lower-than-expected preliminary third-quarter 2023 revenue and warned of reduced capital spending in 4Q.
"We think the Underperform rating is appropriate as Outset has had multiple execution missteps now and companies without profitability have even less margin of error given there is no real profitability valuation floor," the analysts wrote.
They added that Outset experienced some "competitive noise" in 3Q causing confusion in the market with customers, which also led to a delay in sales.
As well, Outset began to see an elongated sales process with hospital customers towards the end of the quarter, who are having more internal discussions/doing more financial analyses on capital purchasing/leasing decisions in the higher rate environment.
Analysts at BofA are now modelling 2023 revenue of $130 million for Outset, 2024 revenue of $146 million (represents low teens growth) and 2025 revenue of $174 million.
Shares of Outset Medical plunged 50% to $3.36 in late-afternoon trading on Friday and have fallen 87% year to date.
Contact Sean at sean@proactiveinvestors.com