ATI Physical Therapy, Inc. (NYSE:ATIP) Just Reported, And Analysts Assigned A US$4.50 Price Target

There's been a major selloff in ATI Physical Therapy, Inc. (NYSE:ATIP) shares in the week since it released its yearly report, with the stock down 24% to US$1.96. Revenues were US$612m, with ATI Physical Therapy reporting some 2.6% below analyst expectations. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for ATI Physical Therapy

After the latest results, the four analysts covering ATI Physical Therapy are now predicting revenues of US$695.5m in 2022. If met, this would reflect a notable 14% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 87% to US$0.51. Before this latest report, the consensus had been expecting revenues of US$697.9m and US$0.17 per share in losses. So it's pretty clear the analysts have mixed opinions on ATI Physical Therapy even after this update; although they reconfirmed their revenue numbers, it came at the cost of a very substantial increase in per-share losses.

The consensus price target fell 6.9% to US$4.50per share, with the analysts clearly concerned by ballooning losses. 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. There are some variant perceptions on ATI Physical Therapy, with the most bullish analyst valuing it at US$6.00 and the most bearish at US$3.50 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that ATI Physical Therapy's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 14% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 8.2% a year over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 7.5% per year. Not only are ATI Physical Therapy's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still 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 ATI Physical Therapy's future valuation.

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 ATI Physical Therapy going out to 2024, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 3 warning signs for ATI Physical Therapy (of which 1 is significant!) you should know about.

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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.