Results: Premier, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts
As you might know, Premier, Inc. (NASDAQ:PINC) recently reported its second-quarter numbers. It looks like a credible result overall - although revenues of US$335m were what the analysts expected, Premier surprised by delivering a (statutory) profit of US$0.45 per share, an impressive 291% above what was forecast. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Premier after the latest results.
View our latest analysis for Premier
Following last week's earnings report, Premier's eight analysts are forecasting 2024 revenues to be US$1.30b, approximately in line with the last 12 months. Statutory earnings per share are predicted to accumulate 7.8% to US$1.51. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.33b and earnings per share (EPS) of US$1.05 in 2024. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the sizeable expansion in to the earnings per share numbers.
There's been no real change to the average price target of US$24.50, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. 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. The most optimistic Premier analyst has a price target of US$30.00 per share, while the most pessimistic values it at US$21.00. 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. We would highlight that revenue is expected to reverse, with a forecast 2.0% annualised decline to the end of 2024. That is a notable change from historical growth of 4.8% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Premier is expected to lag the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Premier following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Still, earnings per share are more important to value creation for shareholders. 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Premier analysts - going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - Premier has 2 warning signs we think you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
