It's been a good week for Heska Corporation (NASDAQ:HSKA) shareholders, because the company has just released its latest quarterly results, and the shares gained 9.5% to US$200. In addition to beating expectations by 12% with revenues of US$61m, Heska delivered a surprise (statutory) profit of US$0.19 per share, a sweet improvement compared to the losses that the analysts forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for Heska from six analysts is for revenues of US$247.3m in 2021 which, if met, would be a substantial 25% increase on its sales over the past 12 months. Heska is also expected to turn profitable, with statutory earnings of US$0.54 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$232.9m and losses of US$0.48 per share in 2021. So we can see there's been a pretty clear upgrade to expectations following the latest results, with a modest lift to revenues expected to lead to profitability earlier than previously forecast.
Despite these upgrades,the analysts have not made any major changes to their price target of US$213, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Heska analyst has a price target of US$230 per share, while the most pessimistic values it at US$182. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
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. The analysts are definitely expecting Heska's growth to accelerate, with the forecast 35% annualised growth to the end of 2021 ranking favourably alongside historical growth of 4.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.0% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Heska to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts now expect Heska to become profitable next year, compared to previous expectations that it would report a loss. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$213, 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 Heska. Long-term earnings power is much more important than next year's profits. We have forecasts for Heska going out to 2025, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Heska that you need to take into consideration.
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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
