Investors in Healthcare Realty Trust Incorporated (NYSE:HR) had a good week, as its shares rose 9.9% to close at US$30.54 following the release of its quarterly results. It was not a great result overall. While revenues of US$125m were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 15% to hit US$0.06 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from Healthcare Realty Trust's seven analysts is for revenues of US$523.7m in 2021, which would reflect a modest 5.8% increase on its sales over the past 12 months. Statutory earnings per share are expected to tumble 71% to US$0.25 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$521.7m and earnings per share (EPS) of US$0.24 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$31.42. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Healthcare Realty Trust, with the most bullish analyst valuing it at US$38.00 and the most bearish at US$25.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. We can infer from the latest estimates that forecasts expect a continuation of Healthcare Realty Trust'shistorical trends, as next year's 5.8% revenue growth is roughly in line with 4.9% annual revenue growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 6.0% next year. So although Healthcare Realty Trust is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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 Healthcare Realty Trust. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Healthcare Realty Trust analysts - going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 4 warning signs for Healthcare Realty Trust (2 are concerning!) that you should be aware of.
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