Sonic Healthcare Limited Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
Sonic Healthcare Limited (ASX:SHL) shareholders are probably feeling a little disappointed, since its shares fell 9.5% to AU$29.10 in the week after its latest half-year results. Revenues were in line with forecasts, at AU$4.3b, although statutory earnings per share came in 15% below what the analysts expected, at AU$0.43 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
View our latest analysis for Sonic Healthcare
Taking into account the latest results, the current consensus from Sonic Healthcare's 14 analysts is for revenues of AU$8.85b in 2024. This would reflect a modest 5.5% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 8.8% to AU$1.15. Before this earnings report, the analysts had been forecasting revenues of AU$8.77b and earnings per share (EPS) of AU$1.34 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.
It might be a surprise to learn that the consensus price target fell 6.4% to AU$31.29, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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. There are some variant perceptions on Sonic Healthcare, with the most bullish analyst valuing it at AU$36.00 and the most bearish at AU$26.00 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Sonic Healthcare's growth to accelerate, with the forecast 11% annualised growth to the end of 2024 ranking favourably alongside historical growth of 8.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.1% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Sonic Healthcare is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
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 Sonic Healthcare analysts - going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for Sonic Healthcare that we have uncovered.
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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.
