Yahoo Finance Earnings Beat: Universal Health Services, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
Investors in Universal Health Services, Inc. (NYSE:UHS) had a good week, as its shares rose 7.5% to close at US$165 following the release of its first-quarter results. Revenues were US$3.8b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$3.82, an impressive 21% ahead of estimates. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Check out our latest analysis for Universal Health Services
Taking into account the latest results, the consensus forecast from Universal Health Services' 14 analysts is for revenues of US$15.6b in 2024. This reflects a credible 6.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to step up 14% to US$13.84. Before this earnings report, the analysts had been forecasting revenues of US$15.5b and earnings per share (EPS) of US$13.44 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$188, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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 Universal Health Services analyst has a price target of US$205 per share, while the most pessimistic values it at US$156. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
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. The analysts are definitely expecting Universal Health Services' growth to accelerate, with the forecast 8.6% annualised growth to the end of 2024 ranking favourably alongside historical growth of 6.0% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Universal Health Services to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Universal Health Services following these results. Happily, there were no major changes to revenue forecasts, with the business still 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Universal Health Services. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Universal Health Services going out to 2026, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 2 warning signs for Universal Health Services that you should be aware 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.
