Analysts Have Lowered Expectations For Evolent Health, Inc. (NYSE:EVH) After Its Latest Results

Investors in Evolent Health, Inc. (NYSE:EVH) had a good week, as its shares rose 4.1% to close at US$10.43 following the release of its annual results. The results look positive overall; while revenues of US$2.6b were in line with analyst predictions, statutory losses were 2.5% smaller than expected, with Evolent Health losing US$0.81 per share. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Evolent Health

Taking into account the latest results, the current consensus, from the 14 analysts covering Evolent Health, is for revenues of US$2.12b in 2025. This implies a considerable 17% reduction in Evolent Health's revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 22% to US$0.63. Before this latest report, the consensus had been expecting revenues of US$2.39b and US$0.37 per share in losses. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

There was no major change to the consensus price target of US$17.55, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts. 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. Currently, the most bullish analyst values Evolent Health at US$47.21 per share, while the most bearish prices it at US$12.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 17% by the end of 2025. This indicates a significant reduction from annual growth of 26% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 9.7% per year. It's pretty clear that Evolent Health's revenues are expected to perform substantially worse 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. 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. 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 Evolent Health. Long-term earnings power is much more important than next year's profits. We have forecasts for Evolent Health going out to 2027, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Evolent Health 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.