Yahoo Finance Analyst Estimates: Here's What Brokers Think Of Evolent Health, Inc. (NYSE:EVH) After Its First-Quarter Report
It's been a good week for Evolent Health, Inc. (NYSE:EVH) shareholders, because the company has just released its latest quarterly results, and the shares gained 8.3% to US$7.08. Revenues of US$247m beat expectations by a respectable 3.6%, although statutory losses per share increased. Evolent Health lost US$0.92, which was 119% more than what the analysts had included in their models. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Evolent Health
Taking into account the latest results, the current consensus from Evolent Health's eleven analysts is for revenues of US$969.6m in 2020, which would reflect a decent 8.2% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 64% to US$1.44. Before this latest report, the consensus had been expecting revenues of US$961.7m and US$0.98 per share in losses. So it's pretty clear the analysts have mixed opinions on Evolent Health even after this update; although they reconfirmed their revenue numbers, it came at the cost of a per-share losses.
The consensus price target held steady at US$14.60, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. 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. There are some variant perceptions on Evolent Health, with the most bullish analyst valuing it at US$18.00 and the most bearish at US$11.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Evolent Health's revenue growth is expected to slow, with forecast 8.2% increase next year well below the historical 43%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 16% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Evolent Health.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Evolent Health. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$14.60, 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 Evolent Health. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Evolent Health analysts - going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 3 warning signs for Evolent Health that you should be aware of.
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