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Analysts Have Been Trimming Their Bright Health Group, Inc. (NYSE:BHG) Price Target After Its Latest Report

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Shareholders will be ecstatic, with their stake up 27% over the past week following Bright Health Group, Inc.'s (NYSE:BHG) latest quarterly results. Revenues of US$1.8b beat expectations by a respectable 5.2%, although statutory losses per share increased. Bright Health Group lost US$0.32, which was 37% more than what the analysts had included in their models. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Bright Health Group

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earnings-and-revenue-growth

Taking into account the latest results, the current consensus from Bright Health Group's nine analysts is for revenues of US$7.05b in 2022, which would reflect a major 41% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 27% to US$1.59. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$6.99b and losses of US$1.26 per share in 2022. While this year's revenue estimates held steady, there was also a sizeable expansion in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

With the increase in forecast losses for next year, it's perhaps no surprise to see that the average price target dipped 6.3% to US$3.28, with the analysts signalling that growing losses would be a definite concern. 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. There are some variant perceptions on Bright Health Group, with the most bullish analyst valuing it at US$6.00 and the most bearish at US$1.80 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Bright Health Group's revenue growth is expected to slow, with the forecast 59% annualised growth rate until the end of 2022 being well below the historical 165% 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) 4.5% per year. Even after the forecast slowdown in growth, it seems obvious that Bright Health Group is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Bright Health Group. 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. 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Bright Health Group going out to 2024, and you can see them free on our platform here..

It is also worth noting that we have found 2 warning signs for Bright Health Group that you need to take into consideration.

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.

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