A week ago, Accolade, Inc. (NASDAQ:ACCD) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. Results overall were solid, with revenues arriving 5.0% better than analyst forecasts at US$110m. Higher revenues also resulted in substantially lower statutory losses which, at US$0.35 per share, were 5.0% smaller than the analysts expected. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, Accolade's 16 analysts are now forecasting revenues of US$468.5m in 2025. This would be a meaningful 8.6% improvement in revenue compared to the last 12 months. Losses are expected to hold steady at around US$1.10. Before this latest report, the consensus had been expecting revenues of US$490.2m and US$1.24 per share in losses. Although the revenue estimates have fallen somewhat, Accolade'sfuture looks a little different to the past, with a favorable reduction in the loss per share forecasts in particular.
The analysts have cut their price target 35% to US$8.47per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses. 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 Accolade analyst has a price target of US$13.00 per share, while the most pessimistic values it at US$5.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Accolade's revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2025 being well below the historical 20% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.6% annually. Even after the forecast slowdown in growth, it seems obvious that Accolade is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. They also downgraded Accolade's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Still, earnings per share are more important to value creation for shareholders. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Accolade analysts - going out to 2027, and you can see them free on our platform here.
Even so, be aware that Accolade is showing 3 warning signs in our investment analysis , you should know about...
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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.
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