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United Insurance Holdings Corp. Just Reported Earnings, And Analysts Cut Their Target Price

Simply Wall St

United Insurance Holdings Corp. (NASDAQ:UIHC) shares fell 4.0% to US$10.03 in the week since its latest yearly results. It looks like the results were pretty good overall. While revenues of US$825m were in line with analyst predictions, statutory losses were much smaller than expected, with United Insurance Holdings losing US$0.70 per share. Following the result, 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for United Insurance Holdings

NasdaqCM:UIHC Past and Future Earnings, February 24th 2020

Taking into account the latest results, the latest consensus from United Insurance Holdings's two analysts is for revenues of US$860.3m in 2020, which would reflect a reasonable 4.3% improvement in sales compared to the last 12 months. Earnings are expected to improve, with United Insurance Holdings forecast to report a statutory profit of US$0.87 per share. Before this earnings report, analysts had been forecasting revenues of US$861.6m and earnings per share (EPS) of US$0.89 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.

The average analyst price target fell 7.5% to US$12.25, with reduced earnings forecasts clearly tied to a lower valuation estimate.

Further, we can compare these estimates to past performance, and see how United Insurance Holdings forecasts compare to the wider market's forecast performance. We would highlight that United Insurance Holdings's revenue growth is expected to slow, with forecast 4.3% increase next year well below the historical 21%p.a. growth over the last five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 0.8% next year. So it's pretty clear that, while United Insurance Holdings's revenue growth is expected to slow, it's still expected to grow faster than the market itself.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that United Insurance Holdings's revenues are expected to grow faster than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of United Insurance Holdings's future valuation.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.