Definitive Healthcare Corp. (NASDAQ:DH) came out with its second-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues were in line with expectations, at US$64m, while statutory losses ballooned to US$1.81 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the consensus from Definitive Healthcare's eleven analysts is for revenues of US$249.7m in 2024, which would reflect a discernible 3.4% decline in revenue compared to the last year of performance. Losses are predicted to fall substantially, shrinking 41% to US$2.05. Before this earnings announcement, the analysts had been modelling revenues of US$255.8m and losses of US$0.78 per share in 2024. So it's pretty clear the analysts have mixed opinions on Definitive Healthcare after this update; revenues were downgraded and per-share losses expected to increase.
The consensus price target fell 25% to US$5.85, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Definitive Healthcare at US$10.00 per share, while the most bearish prices it at US$4.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
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. We would highlight that revenue is expected to reverse, with a forecast 6.7% annualised decline to the end of 2024. That is a notable change from historical growth of 19% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 10% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Definitive Healthcare is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Definitive Healthcare's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Definitive Healthcare. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Definitive Healthcare analysts - going out to 2026, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with Definitive Healthcare .
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.
