ModivCare Inc. (NASDAQ:MODV) Just Reported Earnings, And Analysts Cut Their Target Price

Shareholders in ModivCare Inc. (NASDAQ:MODV) had a terrible week, as shares crashed 37% to US$28.61 in the week since its latest full-year results. ModivCare reported revenues of US$2.8b, in line with expectations, but it unfortunately also reported (statutory) losses of US$14.43 per share, which were slightly larger than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for ModivCare

Following last week's earnings report, ModivCare's six analysts are forecasting 2024 revenues to be US$2.79b, approximately in line with the last 12 months. Per-share statutory losses are expected to explode, reaching US$0.73 per share. In the lead-up to this report, the analysts had been modelling revenues of US$2.89b and earnings per share (EPS) of US$1.47 in 2024. There looks to have been a significant drop in sentiment regarding ModivCare's prospects after these latest results, with a minor downgrade to revenues and the analysts now forecasting a loss instead of a profit.

The consensus price target fell 39% to US$46.60, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on ModivCare, with the most bullish analyst valuing it at US$75.00 and the most bearish at US$26.00 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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 ModivCare's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 1.6% growth on an annualised basis. This is compared to a historical growth rate of 17% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.6% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than ModivCare.

The Bottom Line

The most important thing to take away is that the analysts are expecting ModivCare to become unprofitable next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 ModivCare going out to 2026, 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 ModivCare that we have uncovered.

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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.