Earnings Miss: InnovAge Holding Corp. Missed EPS And Analysts Are Revising Their Forecasts

It's been a mediocre week for InnovAge Holding Corp. (NASDAQ:INNV) shareholders, with the stock dropping 20% to US$4.81 in the week since its latest third-quarter results. The results don't look great, especially considering that the analysts had been forecasting a profit and InnovAge Holding delivered a statutory loss of US$0.02 per share. Revenues of US$177m did beat expectations by 3.6% though. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for InnovAge Holding

After the latest results, the seven analysts covering InnovAge Holding are now predicting revenues of US$718.0m in 2023. If met, this would reflect a modest 3.0% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to leap 75% to US$0.16. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$718.0m and earnings per share (EPS) of US$0.16 in 2023. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of US$4.99, showing that the business is executing well and in line with expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on InnovAge Holding, with the most bullish analyst valuing it at US$6.00 and the most bearish at US$4.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. It's pretty clear that there is an expectation that InnovAge Holding's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 2.4% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.0% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than InnovAge Holding.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple InnovAge Holding analysts - going out to 2024, and you can see them free on our platform here.

Before you take the next step you should know about the 2 warning signs for InnovAge Holding that we have uncovered.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.