A week ago, Select Medical Holdings Corporation (NYSE:SEM) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. The company beat forecasts, with revenue of US$1.8b, some 2.9% above estimates, and statutory earnings per share (EPS) coming in at US$0.75, 32% ahead of expectations. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Select Medical Holdings

Taking into account the latest results, the most recent consensus for Select Medical Holdings from five analysts is for revenues of US$6.97b in 2024. If met, it would imply a credible 2.7% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to accumulate 2.5% to US$2.05. In the lead-up to this report, the analysts had been modelling revenues of US$6.97b and earnings per share (EPS) of US$2.06 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of US$36.00, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Select Medical Holdings at US$40.00 per share, while the most bearish prices it at US$31.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Select Medical Holdings is an easy business to forecast or the the analysts are all using similar assumptions.

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 Select Medical Holdings' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.6% growth on an annualised basis. This is compared to a historical growth rate of 5.5% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.7% annually. Factoring in the forecast slowdown in growth, it seems obvious that Select Medical Holdings is also expected to grow slower than other industry participants.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Select Medical Holdings' revenue is expected to perform worse 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Select Medical Holdings going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Select Medical Holdings (1 is potentially serious!) that you need to be mindful of.

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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.