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Shareholders of Molina Healthcare, Inc. (NYSE:MOH) will be pleased this week, given that the stock price is up 14% to US$146 following its latest annual results. Results look mixed - while revenue fell marginally short of analyst estimates at US$16b, statutory earnings were in line with expectations, at US$11.47 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. 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 Molina Healthcare from eleven analysts is for revenues of US$18.4b in 2020, which is a meaningful 12% increase on its sales over the past 12 months. Statutory per share are forecast to be US$11.55, approximately in line with the last 12 months. In the lead-up to this report, analysts had been modelling revenues of US$18.0b and earnings per share (EPS) of US$11.63 in 2020. There doesn't appear to have been a major change in analyst sentiment following the results, other than the slight bump in revenue estimates.
Even though revenue forecasts increased, there was no change to the consensus price target of US$153, suggesting analysts are focused on earnings as the driver of value creation. 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. There are some variant perceptions on Molina Healthcare, with the most bullish analyst valuing it at US$170 and the most bearish at US$125 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.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. It's clear from the latest estimates that Molina Healthcare's rate of growth is expected to accelerate meaningfully, with forecast 12% revenue growth noticeably faster than its historical growth of 8.9%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 6.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Molina Healthcare is expected to grow much faster than its market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. 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$153, 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 Molina Healthcare going out to 2024, and you can see them free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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