Earnings Update: Quipt Home Medical Corp. (CVE:QIPT) Just Reported Its Third-Quarter Results And Analysts Are Updating Their Forecasts

Last week saw the newest third-quarter earnings release from Quipt Home Medical Corp. (CVE:QIPT), an important milestone in the company's journey to build a stronger business. Results were overall in line with expectations, with the company breaking even at the statutory earnings per share (EPS) level on US$37m in revenue. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Quipt Home Medical

Taking into account the latest results, the most recent consensus for Quipt Home Medical from nine analysts is for revenues of US$185.4m in 2023 which, if met, would be a major 44% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 619% to US$0.34. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$186.8m and earnings per share (EPS) of US$0.41 in 2023. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.

It might be a surprise to learn that the consensus price target was broadly unchanged at CA$12.72, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 Quipt Home Medical analyst has a price target of CA$16.00 per share, while the most pessimistic values it at CA$8.00. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Quipt Home Medical's growth to accelerate, with the forecast 34% annualised growth to the end of 2023 ranking favourably alongside historical growth of 19% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.7% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Quipt Home Medical to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Quipt Home Medical. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are 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 Quipt Home Medical. 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 Quipt Home Medical going out to 2024, and you can see them free on our platform here..

You still need to take note of risks, for example - Quipt Home Medical has 1 warning sign we think 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.