Option Care Health, Inc. (NASDAQ:OPCH) Just Reported Yearly Earnings: Have Analysts Changed Their Mind On The Stock?
Shareholders might have noticed that Option Care Health, Inc. (NASDAQ:OPCH) filed its yearly result this time last week. The early response was not positive, with shares down 5.0% to US$32.24 in the past week. Option Care Health reported US$4.3b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.48 beat expectations, being 3.0% higher than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
View our latest analysis for Option Care Health
After the latest results, the eight analysts covering Option Care Health are now predicting revenues of US$4.69b in 2024. If met, this would reflect a meaningful 9.0% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to crater 27% to US$1.12 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.63b and earnings per share (EPS) of US$1.16 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
The consensus price target held steady at US$39.00, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Option Care Health at US$43.00 per share, while the most bearish prices it at US$36.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Option Care Health's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 9.0% growth on an annualised basis. This is compared to a historical growth rate of 16% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.5% annually. So it's pretty clear that, while Option Care Health's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Option Care Health. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Option Care Health analysts - going out to 2026, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Option Care Health (1 is concerning) you should be aware of.
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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.
