Yahoo Finance Earnings Release: Here's Why Analysts Cut Their ModivCare Inc. (NASDAQ:MODV) Price Target To US$57.50
There's been a major selloff in ModivCare Inc. (NASDAQ:MODV) shares in the week since it released its annual report, with the stock down 47% to US$26.62. ModivCare reported revenues of US$2.8b, in line with expectations, but it unfortunately also reported (statutory) losses of US$14.43 per share, which were slightly larger than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. 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 ModivCare
Taking into account the latest results, the most recent consensus for ModivCare from six analysts is for revenues of US$2.83b in 2024. If met, it would imply a reasonable 2.5% increase on its revenue over the past 12 months. Earnings are expected to improve, with ModivCare forecast to report a statutory profit of US$1.50 per share. Before this earnings report, the analysts had been forecasting revenues of US$2.89b and earnings per share (EPS) of US$1.47 in 2024. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.
The analysts have cut their price target 25% to US$57.50per share, suggesting that the declining revenue was a more crucial indicator than the expected improvement in earnings. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on ModivCare, with the most bullish analyst valuing it at US$105 and the most bearish at US$39.00 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that ModivCare's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 2.5% growth on an annualised basis. This is compared to a historical growth rate of 17% 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 6.5% annually. Factoring in the forecast slowdown in growth, it seems obvious that ModivCare is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around ModivCare's earnings potential next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, earnings are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on ModivCare. 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 ModivCare going out to 2026, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 2 warning signs for ModivCare you should be aware of.
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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.
