Rainbows and Unicorns: Skylight Health Group Inc. (CVE:SLHG) Analysts Just Became A Lot More Optimistic

Shareholders in Skylight Health Group Inc. (CVE:SLHG) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

After this upgrade, Skylight Health Group's four analysts are now forecasting revenues of CA$64m in 2022. This would be a substantial 53% improvement in sales compared to the last 12 months. The loss per share is expected to ameliorate slightly, reducing to CA$0.62. Yet prior to the latest estimates, the analysts had been forecasting revenues of CA$55m and losses of CA$0.81 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

Check out our latest analysis for Skylight Health Group

The consensus price target fell 38%, to CA$2.66, suggesting that the analysts remain pessimistic on the company, despite the improved earnings and revenue outlook. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Skylight Health Group, with the most bullish analyst valuing it at CA$3.25 and the most bearish at CA$2.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. The analysts are definitely expecting Skylight Health Group's growth to accelerate, with the forecast 135% annualised growth to the end of 2022 ranking favourably alongside historical growth of 43% per annum over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Skylight Health Group is expected to grow much faster than its industry.

The Bottom Line

The highlight for us was that the consensus reduced its estimated losses this year, perhaps suggesting Skylight Health Group is moving incrementally towards profitability. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. The declining price target is a puzzle, but still - with a serious upgrade to this year's expectations, it might be time to take another look at Skylight Health Group.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Skylight Health Group going out to 2024, 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.

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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.