Analysts Have Been Trimming Their Bright Health Group, Inc. (NYSE:BHG) Price Target After Its Latest Report

It's shaping up to be a tough period for Bright Health Group, Inc. (NYSE:BHG), which a week ago released some disappointing second-quarter results that could have a notable impact on how the market views the stock. It definitely looks like a negative result overall with revenues falling 12% short of analyst estimates at US$1.6b. Statutory losses were US$0.45 per share, 20% bigger than what the analysts expected. 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.

Check out our latest analysis for Bright Health Group

After the latest results, the nine analysts covering Bright Health Group are now predicting revenues of US$6.96b in 2022. If met, this would reflect a sizeable 28% improvement in sales compared to the last 12 months. Losses are predicted to fall substantially, shrinking 37% to US$1.61. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$7.06b and losses of US$1.58 per share in 2022. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although sales forecasts held steady, the consensus also made a pronounced increase to its losses per share forecasts.

The consensus price target fell 12% to US$2.42per share, with the analysts clearly concerned by ballooning losses. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Bright Health Group, with the most bullish analyst valuing it at US$4.00 and the most bearish at US$1.00 per share. 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. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Bright Health Group's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 63% growth on an annualised basis. This is compared to a historical growth rate of 102% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.0% per year. Even after the forecast slowdown in growth, it seems obvious that Bright Health Group is also expected to grow faster 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 Bright Health Group. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. 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 Bright Health Group going out to 2024, 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 1 warning sign for Bright 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.