Shareholders may have noticed Option Care Health Co., Ltd. (NASDAQ:OPCH) released its annual results this time last week. Initial reaction was not positive, with the stock declining 5.0% to US$32.24 last week. Option Care Health reported revenue of US$4.3 billion, roughly in line with analyst estimates, but statutory earnings per share (EPS) beat expectations at US$1.48, beating analyst estimates by 3.0%. The analysts have updated their earnings model following these results, but it would be good to know whether they think there’s been a big change to the company’s outlook, or if it’s business as usual. We’ve collected the latest statutory forecasts to see if the analysts have changed their earnings model following these results.
Check out our latest analysis for Option Care Health.
Following the latest results, the eight analysts covering Option Care Health are now predicting its revenues in 2024 of US$4.69b. If this is achieved, earnings will reflect a significant improvement of 9.0% compared to the previous 12 months. Statutory earnings per share for the same period are expected to increase by 27% to US$1.12. However, before the latest results, analysts had been forecasting sales of US$4.63b and earnings per share (EPS) of US$1.16 in 2024. Earnings per share are expected to decline slightly next year.
The consensus price target remains unchanged at USD 39.00, and analysts seem to believe that the downward revision of earnings estimates will not lead to a decline in the stock price in the near term. However, this is not the only conclusion that can be drawn from this data, as some investors like to consider the dispersion of analyst forecasts when assessing price targets. Currently, the most bullish analyst values OptionCare Health at $43.00 per share, while the most bearish values it at $36.00. A narrow spread of estimates can suggest that the business’ prospects are relatively easy to assess, or that the analysts have a strong view on its prospects.
One way to get more context about these forecasts is to compare them to their past performance and to the performance of other companies in the same industry. It’s clear that Option Care Health’s revenue growth is expected to slow significantly, with its revenue expected to grow at an annualized rate of 9.0% to the end of 2024. This compares to a historical growth rate of 16% over the past five years. For comparison, other companies in the industry that are covered by analysts are expected to grow their revenue at 6.5% per year. So while Option Care Health’s revenue growth is expected to be slower, it’s clear that it’s still expected to grow faster than the industry itself.
conclusion
The biggest concern is that analysts have cut their earnings per share estimates, suggesting business headwinds may be ahead for Option Care Health. Fortunately, they also reaffirmed their revenue numbers, suggesting they’re performing in line with expectations. Furthermore, our data suggests that revenue is expected to grow faster than the industry as a whole. There was no actual change to the consensus target price, suggesting that the intrinsic value of the business has not changed significantly at the latest estimate.
With this in mind, we think the long-term trajectory of the business is far more important for investors to consider. His forecasts to 2026 from multiple Option Care Health Analysts are available for free on our platform here.
Remember, there may still be risks. For example, we identified 2 warning signs for Option Care Health Note (1 is a concern).
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
