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It's been a good week for Surgery Partners, Inc. (NASDAQ:SGRY) shareholders, because the company has just released its latest full-year results, and the shares gained 9.3% to US$42.06. The results overall were pretty much dead in line with analyst forecasts; revenues were US$1.9b and statutory losses were US$3.19 per share. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the three analysts covering Surgery Partners are now predicting revenues of US$2.22b in 2021. If met, this would reflect a notable 19% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 66% to US$1.10. Before this earnings announcement, the analysts had been modelling revenues of US$2.11b and losses of US$0.88 per share in 2021. While this year's revenue estimates increased, there was also a very substantial increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The average price target rose 23% to US$45.83, even thoughthe analysts have been updating their forecasts to show higher revenues and higher forecast losses. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Surgery Partners analyst has a price target of US$54.00 per share, while the most pessimistic values it at US$35.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Surgery Partners shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Surgery Partners' rate of growth is expected to accelerate meaningfully, with the forecast 19% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 15% p.a. 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 7.2% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Surgery Partners 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 also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Surgery Partners going out to 2022, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Surgery Partners , and understanding these should be part of your investment process.
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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