Aveanna Healthcare Holdings Inc. Just Reported A Surprise Profit And Analysts Updated Their Estimates

It's been a good week for Aveanna Healthcare Holdings Inc. (NASDAQ:AVAH) shareholders, because the company has just released its latest second-quarter results, and the shares gained 6.4% to US$1.84. It was overall a positive result, with revenues beating expectations by 3.2% to hit US$472m. Aveanna Healthcare Holdings also reported a statutory profit of US$0.13, which was a nice improvement from the loss that the analysts were predicting. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Aveanna Healthcare Holdings

Following last week's earnings report, Aveanna Healthcare Holdings' eight analysts are forecasting 2023 revenues to be US$1.86b, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 91% to US$0.10. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$1.86b and losses of US$0.14 per share in 2023. Although the revenue estimates have not really changed Aveanna Healthcare Holdings'future looks a little different to the past, with a considerable decrease in the loss per share forecasts in particular.

These new estimates led to the consensus price target rising 23% to US$1.75, with lower forecast losses suggesting things could be looking up for Aveanna Healthcare Holdings. 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. There are some variant perceptions on Aveanna Healthcare Holdings, with the most bullish analyst valuing it at US$3.00 and the most bearish at US$1.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Aveanna Healthcare Holdings' revenue growth is expected to slow, with the forecast 3.3% annualised growth rate until the end of 2023 being well below the historical 8.0% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.0% per year. Factoring in the forecast slowdown in growth, it seems obvious that Aveanna Healthcare Holdings is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for 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 Aveanna Healthcare Holdings' revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 Aveanna Healthcare Holdings going out to 2025, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 5 warning signs for Aveanna Healthcare Holdings (2 don't sit too well with us) 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.