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Last week saw the newest first-quarter earnings release from Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC), an important milestone in the company's journey to build a stronger business. Sales hit US$77m in line with forecasts, although the company reported a statutory loss per share of US$0.85 that was somewhat smaller than the analysts expected. 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.
Taking into account the latest results, the most recent consensus for Tabula Rasa HealthCare from nine analysts is for revenues of US$342.3m in 2021 which, if met, would be a notable 14% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 25% to US$2.92. Before this latest report, the consensus had been expecting revenues of US$341.7m and US$2.95 per share in losses.
As a result there was no major change to the consensus price target of US$50.14, implying that the business is trading roughly in line with expectations despite ongoing losses. 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. The most optimistic Tabula Rasa HealthCare analyst has a price target of US$70.00 per share, while the most pessimistic values it at US$40.00. 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 Tabula Rasa HealthCare's revenue growth is expected to slow, with the forecast 19% annualised growth rate until the end of 2021 being well below the historical 28% p.a. growth over the last five years. Compare this to the 73 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 16% per year. So it's pretty clear that, while Tabula Rasa HealthCare'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 reconfirmed their loss per share estimates for next year. 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 Tabula Rasa HealthCare. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Tabula Rasa HealthCare analysts - going out to 2025, and you can see them free on our platform here.
You still need to take note of risks, for example - Tabula Rasa HealthCare has 4 warning signs we think you should be aware of.
This article by Simply Wall St is general in nature. 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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