As you might know, Livongo Health, Inc. (NASDAQ:LVGO) just kicked off its latest quarterly results with some very strong numbers. Revenues and losses per share were both better than expected, with revenues of US$69m leading estimates by 4.1%. Statutory losses were smaller than the analystsexpected, coming in at US$0.06 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the twelve analysts covering Livongo Health are now predicting revenues of US$299.5m in 2020. If met, this would reflect a huge 45% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 42% to US$0.38. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$301.2m and losses of US$0.51 per share in 2020. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading revenues and making a losses per share in particular.
The average price target rose 24% to US$53.92, with the analysts signalling that the forecast reduction in losses would be a positive for the stock's valuation. 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. Currently, the most bullish analyst values Livongo Health at US$65.00 per share, while the most bearish prices it at US$36.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. We would highlight that Livongo Health's revenue growth is expected to slow, with forecast 45% increase next year well below the historical 134% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 16% next year. Even after the forecast slowdown in growth, it seems obvious that Livongo Health is also expected to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Livongo Health analysts - going out to 2022, and you can see them free on our platform here.
You still need to take note of risks, for example - Livongo Health has 2 warning signs we think you should be aware of.
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