Investors in Life Time Group Holdings, Inc. (NYSE:LTH) had a good week, as its shares rose 2.3% to close at US$14.23 following the release of its quarterly results. It looks like the results were pretty good overall. While revenues of US$392m were in line with analyst predictions, statutory losses were much smaller than expected, with Life Time Group Holdings losing US$0.20 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Life Time Group Holdings from ten analysts is for revenues of US$1.88b in 2022 which, if met, would be a sizeable 28% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 88% to US$0.28. Before this earnings announcement, the analysts had been modelling revenues of US$1.87b and losses of US$0.35 per share in 2022. Although the revenue estimates have not really changed Life Time Group Holdings'future looks a little different to the past, with a very promising decrease in the loss per share forecasts in particular.
There's been no major changes to the consensus price target of US$19.50, suggesting that reduced loss estimates are not enough to have a long-term positive impact on the stock's 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. There are some variant perceptions on Life Time Group Holdings, with the most bullish analyst valuing it at US$40.00 and the most bearish at US$14.00 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Life Time Group Holdings' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 40% growth on an annualised basis. This is compared to a historical growth rate of 85% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% annually. So it's pretty clear that, while Life Time Group Holdings' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss 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 no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Life Time Group Holdings. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Life Time Group Holdings 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 Life Time Group Holdings , and understanding this should be part of your investment process.
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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.