PRA Health Sciences, Inc. Just Released Its Annual Results And Analysts Are Updating Their Estimates
Last week, you might have seen that PRA Health Sciences, Inc. (NASDAQ:PRAH) released its annual result to the market. The early response was not positive, with shares down 3.7% to US$107 in the past week. It was a credible result overall, with revenues of US$3.1b and statutory earnings per share of US$3.68 both in line with analyst estimates, showing that PRA Health Sciences is executing in line with expectations. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for PRA Health Sciences
Taking into account the latest results, the current consensus from PRA Health Sciences's twelve analysts is for revenues of US$3.30b in 2020, which would reflect a satisfactory 7.6% increase on its sales over the past 12 months. Statutory earnings per share are expected to swell 11% to US$4.20. In the lead-up to this report, analysts had been modelling revenues of US$3.32b and earnings per share (EPS) of US$4.36 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at US$118, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on PRA Health Sciences, with the most bullish analyst valuing it at US$135 and the most bearish at US$90.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
In addition, we can look to PRA Health Sciences's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. We would highlight that PRA Health Sciences's revenue growth is expected to slow, with forecast 7.6% increase next year well below the historical 21%p.a. growth over the last five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.6% next year. So it's pretty clear that, while PRA Health Sciences's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider market. 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.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple PRA Health Sciences analysts - going out to 2023, and you can see them free on our platform here.
You can also see whether PRA Health Sciences is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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