It's been a sad week for Anthem, Inc. (NYSE:ANTM), who've watched their investment drop 11% to US$265 in the week since the company reported its full-year result. It was a credible result overall, with revenues of US$104b and statutory earnings per share of US$18.47 both in line with analyst estimates, showing that Anthem is executing in line with expectations. 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 analysts are expecting for next year.
Following the latest results, Anthem's 13 analysts are now forecasting revenues of US$117.2b in 2020. This would be a notable 13% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to climb 16% to US$21.47. Yet prior to the latest earnings, analysts had been forecasting revenues of US$114.8b and earnings per share (EPS) of US$21.49 in 2020. There doesn't appear to have been a major change in analyst sentiment following the results, other than the small lift in revenue estimates.
It may not be a surprise to see that analysts have reconfirmed their price target of US$343, implying that the uplift in sales is not expected to greatly contribute to Anthem's valuation in the near term. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Anthem, with the most bullish analyst valuing it at US$400 and the most bearish at US$300 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Further, we can compare these estimates to past performance, and see how Anthem forecasts compare to the wider market's forecast performance. It's clear from the latest estimates that Anthem's rate of growth is expected to accelerate meaningfully, with forecast 13% revenue growth noticeably faster than its historical growth of 6.0%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Anthem is expected to grow much faster than its market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. The consensus price target held steady at US$343, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Anthem going out to 2024, and you can see them free on our platform here.
We also provide an overview of the Anthem Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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