SelectQuote, Inc. (NYSE:SLQT) Reported Earnings Last Week And Analysts Are Already Upgrading Their Estimates

Shareholders of SelectQuote, Inc. (NYSE:SLQT) will be pleased this week, given that the stock price is up 15% to US$22.34 following its latest full-year results. Overall the results were a little better than the analysts were expecting, with revenues beating forecasts by 4.3%to hit US$532m. 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for SelectQuote

Following the latest results, SelectQuote's six analysts are now forecasting revenues of US$804.7m in 2021. This would be a sizeable 51% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to shrink 9.9% to US$0.75 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$756.8m and earnings per share (EPS) of US$0.67 in 2021. So it seems there's been a definite increase in optimism about SelectQuote's future following the latest results, with a decent improvement in the earnings per share forecasts in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of US$31.10, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 SelectQuote, with the most bullish analyst valuing it at US$35.00 and the most bearish at US$25.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await SelectQuote shareholders.

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. We can infer from the latest estimates that forecasts expect a continuation of SelectQuote'shistorical trends, as next year's 51% revenue growth is roughly in line with 57% annual revenue growth over the past year. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 4.9% next year. So it's pretty clear that SelectQuote is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards SelectQuote following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at US$31.10, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for SelectQuote going out to 2025, 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 SelectQuote (of which 2 can't be ignored!) you should know about.

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