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Need To Know: Analysts Are Much More Bullish On Skylight Health Group Inc. (CVE:SLHG)

·3 min read

Skylight Health Group Inc. (CVE:SLHG) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance.

After this upgrade, Skylight Health Group's four analysts are now forecasting revenues of CA$64m in 2022. This would be a major 53% improvement in sales compared to the last 12 months. The loss per share is expected to ameliorate slightly, reducing to CA$0.62. Yet before this consensus update, the analysts had been forecasting revenues of CA$55m and losses of CA$0.81 per share in 2022. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

View our latest analysis for Skylight Health Group

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Yet despite these upgrades, the analysts cut their price target 38% to CA$2.66, implicitly signalling that the ongoing losses are likely to weigh negatively on Skylight Health Group's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Skylight Health Group, with the most bullish analyst valuing it at CA$3.25 and the most bearish at CA$2.00 per share. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Skylight Health Group's rate of growth is expected to accelerate meaningfully, with the forecast 135% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 43% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.7% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Skylight Health Group is expected to grow much faster than its industry.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Skylight Health Group is moving incrementally towards profitability. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. The declining price target is a puzzle, but still - with a serious upgrade to this year's expectations, it might be time to take another look at Skylight Health Group.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Skylight Health Group going out to 2024, and you can see them free on our platform here..

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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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