Evolent Health, Inc. Just Released Its Full-Year Results And Analysts Are Updating Their Estimates
It's been a mediocre week for Evolent Health, Inc. (NYSE:EVH) shareholders, with the stock dropping 16% to US$9.75 in the week since its latest yearly results. Revenues of US$846m arrived in line with expectations, although statutory losses per share were US$3.67, an impressive 157% smaller than what broker models predicted. Following the result, 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. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Check out our latest analysis for Evolent Health
Following the latest results, Evolent Health's eleven analysts are now forecasting revenues of US$964.0m in 2020. This would be a decent 14% improvement in sales compared to the last 12 months. Statutory losses are forecast to balloon 75% to US$0.93 per share. Before this earnings announcement, analysts had been forecasting revenues of US$929.4m and losses of US$0.70 per share in 2020. While next year's revenue estimates increased, there was also a pretty serious reduction to EPS expectations, suggesting the consensus has a bit of a mixed view of these results.
There was no major change to the consensus price target of US$15.10, with growing revenues seemingly enough to offset the concern of growing losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Evolent Health analyst has a price target of US$17.00 per share, while the most pessimistic values it at US$12.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Evolent Health shareholders.
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 analysts expect Evolent Health's revenue growth will slow down substantially, with revenues next year expected to grow 14%, compared to a historical growth rate of 36% over the past three years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 14% next year. Factoring in the forecast slowdown in growth, it looks like analysts are expecting Evolent Health to grow at about the same rate as the wider market.
The Bottom Line
There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. The consensus price target held steady at US$15.10, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Evolent Health analysts - going out to 2024, and you can see them free on our platform here.
You can also see whether Evolent Health is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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