Investors in HealthStream, Inc. (NASDAQ:HSTM) had a good week, as its shares rose 7.9% to close at US$26.41 following the release of its quarterly results. Revenues were US$73m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.17, an impressive 52% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on HealthStream after the latest results.

View our latest analysis for HealthStream

After the latest results, the six analysts covering HealthStream are now predicting revenues of US$294.0m in 2024. If met, this would reflect an okay 3.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to dip 9.0% to US$0.54 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$293.6m and earnings per share (EPS) of US$0.51 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 5.6% to US$31.67. 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 HealthStream at US$36.00 per share, while the most bearish prices it at US$27.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that HealthStream's rate of growth is expected to accelerate meaningfully, with the forecast 5.3% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 2.8% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, HealthStream is expected to grow slower than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around HealthStream's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that HealthStream's revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on HealthStream. Long-term earnings power is much more important than next year's profits. We have forecasts for HealthStream going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for HealthStream that you should be aware 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.