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There's been a notable change in appetite for InnovAge Holding Corp. (NASDAQ:INNV) shares in the week since its quarterly report, with the stock down 20% to US$4.81. The results don't look great, especially considering that the analysts had been forecasting a profit and InnovAge Holding delivered a statutory loss of US$0.02 per share. Revenues of US$177m did beat expectations by 3.6% though. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on InnovAge Holding after the latest results.
Taking into account the latest results, the current consensus from InnovAge Holding's seven analysts is for revenues of US$718.0m in 2023, which would reflect a modest 3.0% increase on its sales over the past 12 months. Statutory earnings per share are predicted to soar 75% to US$0.16. In the lead-up to this report, the analysts had been modelling revenues of US$718.0m and earnings per share (EPS) of US$0.16 in 2023. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$4.99, suggesting that the company has met expectations in its recent result. 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 InnovAge Holding analyst has a price target of US$6.00 per share, while the most pessimistic values it at US$4.00. 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that InnovAge Holding's revenue growth is expected to slow, with the forecast 2.4% annualised growth rate until the end of 2023 being well below the historical 13% p.a. growth over the last three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.0% annually. Factoring in the forecast slowdown in growth, it seems obvious that InnovAge Holding is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that InnovAge Holding's revenues are expected to perform worse 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 forecasts for InnovAge Holding going out to 2024, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with InnovAge Holding .
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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.