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Investors in Apollo Medical Holdings, Inc. (NASDAQ:AMEH) had a good week, as its shares rose 7.2% to close at US$18.40 following the release of its quarterly results. Revenues were US$165m, approximately in line with whatthe analyst expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.11, an impressive 175% ahead of estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analyst has changed their mind on Apollo Medical Holdings after the latest results.
Following the latest results, Apollo Medical Holdings' sole analyst are now forecasting revenues of US$668.9m in 2020. This would be a reasonable 6.2% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 29% to US$0.66. In the lead-up to this report, the analyst had been modelling revenues of US$675.1m and earnings per share (EPS) of US$0.75 in 2020. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.
The average price target fell 8.0% to US$23.00, with reduced earnings forecasts clearly tied to a lower valuation estimate.
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. It's pretty clear that there is an expectation that Apollo Medical Holdings' revenue growth will slow down substantially, with revenues next year expected to grow 6.2%, compared to a historical growth rate of 21% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.9% next year. Factoring in the forecast slowdown in growth, it looks like Apollo Medical Holdings is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The biggest concern is that the analyst reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Apollo Medical Holdings. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
Before you take the next step you should know about the 2 warning signs for Apollo Medical Holdings (1 is potentially serious!) that we have uncovered.
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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. Thank you for reading.