Yahoo Finance Brokers Are Upgrading Their Views On Medifast, Inc. (NYSE:MED) With These New Forecasts
Medifast, Inc. (NYSE:MED) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Medifast has also found favour with investors, with the stock up an impressive 23% to US$278 over the past week. It will be interesting to see if today's upgrade is enough to propel the stock even higher.
Following the upgrade, the current consensus from Medifast's three analysts is for revenues of US$1.4b in 2021 which - if met - would reflect a major 32% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 28% to US$13.62. Before this latest update, the analysts had been forecasting revenues of US$1.2b and earnings per share (EPS) of US$10.89 in 2021. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.
See our latest analysis for Medifast
It will come as no surprise to learn that the analysts have increased their price target for Medifast 20% to US$363 on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Medifast at US$400 per share, while the most bearish prices it at US$295. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Medifast is an easy business to forecast or the underlying assumptions are obvious.
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 clear from the latest estimates that Medifast's rate of growth is expected to accelerate meaningfully, with the forecast 44% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 31% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Medifast to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Medifast could be worth investigating further.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Medifast analysts - going out to 2022, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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. 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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