Analysts Are Updating Their HealthStream, Inc. (NASDAQ:HSTM) Estimates After Its Full-Year Results

The annual results for HealthStream, Inc. (NASDAQ:HSTM) were released last week, making it a good time to revisit its performance. It looks like the results were a bit of a negative overall. While revenues of US$245m were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 3.8% to hit US$0.44 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 HealthStream

Taking into account the latest results, the five analysts covering HealthStream provided consensus estimates of US$233.6m revenue in 2021, which would reflect a noticeable 4.6% decline on its sales over the past 12 months. Statutory earnings per share are expected to plunge 84% to US$0.072 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$233.6m and earnings per share (EPS) of US$0.05 in 2021. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the sizeable expansion in earnings per share expectations following these results.

The consensus price target was unchanged at US$24.00, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. Currently, the most bullish analyst values HealthStream at US$30.00 per share, while the most bearish prices it at US$20.00. 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 HealthStream 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. We would highlight that sales are expected to reverse, with the forecast 4.6% revenue decline a notable change from historical growth of 4.0% 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 19% annually for the foreseeable future. It's pretty clear that HealthStream's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards HealthStream following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for HealthStream going out to 2025, 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 1 warning sign with HealthStream , and understanding it should be part of your investment process.

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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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