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Healius Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

·4 min read

Healius Limited (ASX:HLS) shareholders are probably feeling a little disappointed, since its shares fell 2.1% to AU$3.72 in the week after its latest yearly results. The result was positive overall - although revenues of AU$2.3b were in line with what the analysts predicted, Healius surprised by delivering a statutory profit of AU$0.52 per share, modestly greater than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Healius

earnings-and-revenue-growth
earnings-and-revenue-growth

Following the recent earnings report, the consensus from 15 analysts covering Healius is for revenues of AU$1.95b in 2023, implying an uneasy 16% decline in sales compared to the last 12 months. Statutory earnings per share are expected to plunge 59% to AU$0.21 in the same period. In the lead-up to this report, the analysts had been modelling revenues of AU$1.98b and earnings per share (EPS) of AU$0.22 in 2023. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at AU$4.17, 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. Currently, the most bullish analyst values Healius at AU$4.90 per share, while the most bearish prices it at AU$3.50. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Healius' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 16% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 5.6% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Healius is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Healius. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider 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.

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. We have estimates - from multiple Healius 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 - Healius has 2 warning signs (and 1 which is potentially serious) we think you should know about.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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