Yahoo Finance Target Healthcare REIT PLC Just Missed Earnings - But Analysts Have Updated Their Models
Shareholders might have noticed that Target Healthcare REIT PLC (LON:THRL) filed its yearly result this time last week. The early response was not positive, with shares down 9.5% to UK£0.81 in the past week. Target Healthcare REIT beat revenue forecasts by a solid 12% to hit UK£64m. Statutory earnings per share fell 15% short of expectations, at UK£0.082. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
See our latest analysis for Target Healthcare REIT
After the latest results, the four analysts covering Target Healthcare REIT are now predicting revenues of UK£68.2m in 2023. If met, this would reflect an okay 6.8% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to fall 10% to UK£0.071 in the same period. Before this earnings report, the analysts had been forecasting revenues of UK£68.2m and earnings per share (EPS) of UK£0.11 in 2023. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at UK£1.04, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Target Healthcare REIT analyst has a price target of UK£1.10 per share, while the most pessimistic values it at UK£0.95. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Target Healthcare REIT's revenue growth is expected to slow, with the forecast 6.8% annualised growth rate until the end of 2023 being well below the historical 19% p.a. growth over the last five years. Compare this to the 53 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 5.8% per year. So it's pretty clear that, while Target Healthcare REIT's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Target Healthcare REIT. 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 Target Healthcare REIT going out to 2025, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Target Healthcare REIT , and understanding this should be part of your investment process.
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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.
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