It's been a mediocre week for Medifast, Inc. (NYSE:MED) shareholders, with the stock dropping 18% to US$27.53 in the week since its latest quarterly results. It looks like the results were a bit of a negative overall. While revenues of US$175m were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 5.0% to hit US$0.76 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Taking into account the latest results, the current consensus, from the twin analysts covering Medifast, is for revenues of US$646.3m in 2024. This implies a substantial 28% reduction in Medifast's revenue over the past 12 months. Statutory earnings per share are forecast to tumble 86% to US$0.87 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$694.4m and earnings per share (EPS) of US$1.91 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a pretty serious reduction to earnings per share numbers.

The consensus price target fell 33% to US$25.00, with the weaker earnings outlook clearly leading valuation estimates.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 35% by the end of 2024. This indicates a significant reduction from annual growth of 15% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.0% annually for the foreseeable future. It's pretty clear that Medifast's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Medifast going out as far as 2025, and you can see them free on our platform here.

You still need to take note of risks, for example - Medifast has 2 warning signs (and 1 which is potentially serious) we think you should know about.

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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.