Livongo Health, Inc. (NASDAQ:LVGO) Released Earnings Last Week And Analysts Lifted Their Price Target To US$140

Livongo Health, Inc. (NASDAQ:LVGO) came out with its third-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 of US$106m beat expectations by a respectable 7.1%, although statutory losses per share increased. Livongo Health lost US$0.26, which was 608% more than what the analysts had included in their models. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Livongo Health after the latest results.

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NasdaqGS:LVGO Earnings and Revenue Growth October 30th 2020

After the latest results, the 15 analysts covering Livongo Health are now predicting revenues of US$563.0m in 2021. If met, this would reflect a substantial 77% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Livongo Health forecast to report a statutory profit of US$0.0088 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$557.1m and losses of US$0.14 per share in 2021. While there's been no material change to the revenue estimates, there's been a pretty clear upgrade to earnings estimates, with the analysts expecting a per-share profit compared to previous expectations of a loss. So it seems like the latest results have led to a significant increase in sentiment for Livongo Health.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 5.8% to US$140. 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 Livongo Health analyst has a price target of US$160 per share, while the most pessimistic values it at US$114. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Next year brings more of the same, according to the analysts, with revenue forecast to grow 77%, in line with its 67% annual growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 19% per year. So it's pretty clear that Livongo Health is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that there's been a clear step-change in belief around the business' prospects, with the analysts now expecting Livongo Health to become profitable next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Livongo Health analysts - going out to 2024, and you can see them free on our platform here.

You still need to take note of risks, for example - Livongo Health has 2 warning signs we think you should be aware of.

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@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.

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