Netcare Limited Beat Revenue Forecasts By 6.6%: Here's What Analysts Are Forecasting Next

Netcare Limited (JSE:NTC) shareholders are probably feeling a little disappointed, since its shares fell 4.6% to R14.26 in the week after its latest half-year results. Results overall were respectable, with statutory earnings of R0.72 per share roughly in line with what the analysts had forecast. Revenues of R12b came in 6.6% ahead of analyst predictions. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Netcare

After the latest results, the eight analysts covering Netcare are now predicting revenues of R23.8b in 2023. If met, this would reflect a credible 4.2% improvement in sales compared to the last 12 months. Per-share earnings are expected to step up 15% to R1.02. Before this earnings report, the analysts had been forecasting revenues of R23.8b and earnings per share (EPS) of R1.00 in 2023. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of R16.78, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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 Netcare, with the most bullish analyst valuing it at R18.40 and the most bearish at R15.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Netcare's growth to accelerate, with the forecast 8.5% annualised growth to the end of 2023 ranking favourably alongside historical growth of 1.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.8% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Netcare is expected to grow at about the same rate as the wider 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 Netcare following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at R16.78, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Netcare. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Netcare going out to 2025, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Netcare , and understanding this should be part of your investment process.

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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.