Why Did Outset Medical Stock Tumble Today?

The medical technology company lowered its full-year revenue outlook to $115 million to $120 million from a prior range of $122 million to $126 million, citing a delay in the closing of deals slated for the last quarter.

• For Q3, Outset Medical’s adjusted net loss came in at $0.69 per share, higher than an estimated loss of $0.66 per share.
• Several analysts subsequently slashed price targets on Tuesday. 
• RBC Capital lowered its price target on Outset Medical to $17 from $22 while keeping a ‘Sector Perform’ rating on the shares.

Shares of Outset Medical, Inc. (OM) tumbled 47% as of Tuesday afternoon after multiple analysts slashed their price targets on the stock on the heels of disappointing earnings and lowered revenue guidance.

On Monday, the company reported third-quarter (Q3) net revenue of $29.4 million, representing a 3% year-over-year growth, but below the analyst estimate of $30.70 million, according to estimates compiled by Fiscal AI.

Adjusted net loss came in at $0.69 per share, higher than an estimated loss of $0.66 per share. The medical technology company also lowered its full-year revenue outlook to $115 million to $120 million from a prior range of $122 million to $126 million, citing a delay in the closing of deals slated for the last quarter.

Analysts’ Take

On Tuesday, several analysts lowered their price targets on the stock following the disappointing earnings report.

RBC Capital lowered its price target on Outset Medical to $17 from $22 while keeping a ‘Sector Perform’ rating on the shares. TD Cowen analyst Joshua Jennings lowered the firm's price target on the stock to $15 from $25. Jennings, however, kept a ‘Buy’ rating on the shares.

Meanwhile, Stifel lowered its target to $14 from $17 and kept a ‘Buy’ rating on the shares. According to the firm, the company’s strong pipeline might yield better performance ahead.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around OM stock rose from ‘bullish’ to ‘extremely bullish’ territory over the past 24 hours while message volume increased from ‘normal’ to ‘extremely high’ levels.

A Stocktwits user expressed optimism, saying that they don't see the growth story ending by one quarter's earnings.

Another termed the drop in share price an overreaction.

OM stock is down 62% this year and approximately 50% over the past 12 months. 

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