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Investors in Medifast, Inc. (NYSE:MED) had a good week, as its shares rose 6.7% to close at US$12.98 following the release of its first-quarter results. Revenues of US$116m arrived in line with expectations, although statutory losses per share were US$0.07, an impressive 72% smaller than what broker models predicted. Earnings are an important time for investors, as they can track a company's performance, look at what the analyst is forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analyst has changed their earnings models, following these results.
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Taking into account the latest results, the solitary analyst covering Medifast provided consensus estimates of US$390.1m revenue in 2025, which would reflect a concerning 28% decline over the past 12 months. Per-share losses are expected to explode, reaching US$0.96 per share. Yet prior to the latest earnings, the analyst had been forecasting revenues of US$414.4m and losses of US$1.02 per share in 2025. It looks like there's been a modest increase in sentiment in the recent updates, with the analyst becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers fell somewhat.
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The consensus price target fell 9.1% to US$15.00, with the dip in revenue estimates clearly souring sentiment, despite the forecast reduction in losses.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Medifast's past performance and to peers in the same industry. Over the past five years, revenues have declined around 4.3% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 36% decline in revenue until the end of 2025. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.3% per year. So while a broad number of companies are forecast to grow, unfortunately Medifast is expected to see its revenue affected worse than other companies in the industry.
The Bottom Line
The most obvious conclusion is that the analyst made no changes to their forecasts for a loss 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. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analyst also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.