Yahoo Finance Results: Option Care Health, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates
A week ago, Option Care Health, Inc. (NASDAQ:OPCH) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 4.0% to hit US$1.1b. Option Care Health reported statutory earnings per share (EPS) US$0.26, which was a notable 16% above what the analysts had 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Option Care Health
Taking into account the latest results, the most recent consensus for Option Care Health from nine analysts is for revenues of US$4.74b in 2024. If met, it would imply a modest 6.8% increase on its revenue over the past 12 months. Statutory earnings per share are expected to crater 26% to US$1.16 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.71b and earnings per share (EPS) of US$1.13 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at US$39.45, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Option Care Health analyst has a price target of US$43.00 per share, while the most pessimistic values it at US$36.00. This is a very narrow spread of estimates, implying either that Option Care Health is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Option Care Health's past performance and to peers in the same industry. We would highlight that Option Care Health's revenue growth is expected to slow, with the forecast 9.2% annualised growth rate until the end of 2024 being well below the historical 15% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.7% annually. So it's pretty clear that, while Option Care Health's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Option Care Health's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$39.45, with the latest estimates not enough to have an impact on their price targets.
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. At Simply Wall St, we have a full range of analyst estimates for Option Care Health going out to 2026, and you can see them free on our platform here..
Even so, be aware that Option Care Health is showing 3 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...
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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.
