Shareholders of WELL Health Technologies Corp. (TSE:WELL) will be pleased this week, given that the stock price is up 11% to CA$4.10 following its latest quarterly results. Revenues of CA$140m beat expectations by a respectable 7.7%, although statutory losses per share increased. WELL Health Technologies lost CA$0.03, which was 300% more than what the analysts had included in their models. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, WELL Health Technologies' twelve analysts are now forecasting revenues of CA$553.9m in 2022. This would be a solid 15% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 66% to CA$0.053. Before this earnings announcement, the analysts had been modelling revenues of CA$528.9m and losses of CA$0.005 per share in 2022. So it's pretty clear the analysts have mixed opinions on WELL Health Technologies even after this update; although they upped their revenue numbers, it came at the cost of a very substantial increase in per-share losses.
There was no major change to the consensus price target of CA$8.04, with growing revenues seemingly enough to offset the concern of growing losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on WELL Health Technologies, with the most bullish analyst valuing it at CA$13.50 and the most bearish at CA$6.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that WELL Health Technologies' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 32% growth on an annualised basis. This is compared to a historical growth rate of 71% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.1% per year. Even after the forecast slowdown in growth, it seems obvious that WELL Health Technologies is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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.
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 forecasts for WELL Health Technologies going out to 2024, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 2 warning signs for WELL Health Technologies that you need to be mindful of.
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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.
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