LifeStance Health Group, Inc. (NASDAQ:LFST) Just Reported Earnings, And Analysts Cut Their Target Price

Last week saw the newest second-quarter earnings release from LifeStance Health Group, Inc. (NASDAQ:LFST), an important milestone in the company's journey to build a stronger business. The business exceeded expectations with revenue of US$312m coming in 2.3% ahead of forecasts. Statutory losses were US$0.06 a share, in line with what the analysts predicted. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for LifeStance Health Group

After the latest results, the seven analysts covering LifeStance Health Group are now predicting revenues of US$1.22b in 2024. If met, this would reflect a modest 5.7% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 39% to US$0.24. Before this latest report, the consensus had been expecting revenues of US$1.22b and US$0.25 per share in losses. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.

Even with the lower forecast losses, the analysts lowered their valuations, with the average price target falling 5.9% to US$8.00. It looks likethe analysts have become less optimistic about the overall business. 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 LifeStance Health Group, with the most bullish analyst valuing it at US$10.00 and the most bearish at US$6.00 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that LifeStance Health Group's revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2024 being well below the historical 23% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.8% per year. Even after the forecast slowdown in growth, it seems obvious that LifeStance Health Group is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of LifeStance Health Group's future valuation.

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. At Simply Wall St, we have a full range of analyst estimates for LifeStance Health Group going out to 2026, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 2 warning signs for LifeStance Health Group that you need to be mindful 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.