American Well Corporation (NYSE:AMWL) Just Released Its First-Quarter Earnings: Here's What Analysts Think

Investors in American Well Corporation (NYSE:AMWL) had a good week, as its shares rose 8.0% to close at US$0.57 following the release of its first-quarter results. It was a pretty bad result overall; while revenues were in line with expectations at US$60m, statutory losses exploded to US$0.25 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.

View our latest analysis for American Well

After the latest results, the eleven analysts covering American Well are now predicting revenues of US$262.0m in 2024. If met, this would reflect an okay 2.9% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 32% to US$0.80. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$262.0m and losses of US$0.77 per share in 2024. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although revenue forecasts held steady, the consensus also made a moderate increase in its losses per share forecasts.

The consensus price target held steady at US$1.94, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic American Well analyst has a price target of US$4.00 per share, while the most pessimistic values it at US$1.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. 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 clear from the latest estimates that American Well's rate of growth is expected to accelerate meaningfully, with the forecast 3.9% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 2.9% p.a. over the past three 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, American Well is expected to grow slower than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at American Well. On the plus side, there were no major changes to revenue estimates; although forecasts imply they 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.

With that in mind, we wouldn't be too quick to come to a conclusion on American Well. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for American Well going out to 2026, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 4 warning signs for American Well you should be aware 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.