HealthStream, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

It's been a good week for HealthStream, Inc. (NASDAQ:HSTM) shareholders, because the company has just released its latest first-quarter results, and the shares gained 7.9% to US$26.41. It looks like a credible result overall - although revenues of US$73m were what the analysts expected, HealthStream surprised by delivering a (statutory) profit of US$0.17 per share, an impressive 52% above what was forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for HealthStream

After the latest results, the six analysts covering HealthStream are now predicting revenues of US$294.0m in 2024. If met, this would reflect an okay 3.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to reduce 9.0% to US$0.54 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$293.6m and earnings per share (EPS) of US$0.51 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 5.6% to US$31.67. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values HealthStream at US$36.00 per share, while the most bearish prices it at US$27.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

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. The analysts are definitely expecting HealthStream's growth to accelerate, with the forecast 5.3% annualised growth to the end of 2024 ranking favourably alongside historical growth of 2.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 11% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, HealthStream is expected to grow slower 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that HealthStream's 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.

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 2026, 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. 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.