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Quipt Home Medical Corp. (CVE:QIPT) Just Released Its Third-Quarter Earnings: Here's What Analysts Think

Quipt Home Medical Corp. (CVE:QIPT) last week reported its latest third-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Results were overall in line with expectations, with the company breaking even at the statutory earnings per share (EPS) level on US$37m in revenue. 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.

See our latest analysis for Quipt Home Medical

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Taking into account the latest results, the current consensus from Quipt Home Medical's nine analysts is for revenues of US$185.4m in 2023, which would reflect a huge 44% increase on its sales over the past 12 months. Per-share earnings are expected to surge 619% to US$0.34. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$186.8m and earnings per share (EPS) of US$0.41 in 2023. So there's definitely been a decline in sentiment after the latest results, noting the substantial drop in new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at CA$12.72, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. Currently, the most bullish analyst values Quipt Home Medical at CA$16.00 per share, while the most bearish prices it at CA$8.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Quipt Home Medical's rate of growth is expected to accelerate meaningfully, with the forecast 34% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 19% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.7% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Quipt Home Medical is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Quipt Home Medical. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at CA$12.72, 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 Quipt Home Medical. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Quipt Home Medical analysts - going out to 2024, 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 Quipt Home Medical , and understanding it should be part of your investment process.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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