Analyst Estimates: Here's What Brokers Think Of CareRx Corporation (TSE:CRRX) After Its Second-Quarter Report

Last week, you might have seen that CareRx Corporation (TSE:CRRX) released its quarterly result to the market. The early response was not positive, with shares down 3.1% to CA$2.18 in the past week. It was a pretty bad result overall; while revenues were in line with expectations at CA$92m, statutory losses exploded to CA$0.02 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for CareRx

Taking into account the latest results, CareRx's six analysts currently expect revenues in 2024 to be CA$365.1m, approximately in line with the last 12 months. CareRx is also expected to turn profitable, with statutory earnings of CA$0.03 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$367.2m and earnings per share (EPS) of CA$0.0085 in 2024. Although the revenue estimates have not really changed, we can see there's been a great increase in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

There's been no major changes to the consensus price target of CA$3.91, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values CareRx at CA$5.25 per share, while the most bearish prices it at CA$2.75. 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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 0.8% by the end of 2024. This indicates a significant reduction from annual growth of 26% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - CareRx is expected to lag the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around CareRx's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that CareRx's revenue is expected to perform worse 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 CareRx going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 4 warning signs for CareRx 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.