It's been a good week for Medifast, Inc. (NYSE:MED) shareholders, because the company has just released its latest quarterly results, and the shares gained 8.4% to US$13.14. It looks like the results were pretty good overall. While revenues of US$116m were in line with analyst predictions, statutory losses were much smaller than expected, with Medifast losing US$0.07 per share. The analyst 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. So we gathered the latest post-earnings forecasts to see what estimate suggests is in store for next year.
Taking into account the latest results, the current consensus, from the single analyst covering Medifast, is for revenues of US$390.1m in 2025. This implies a sizeable 28% reduction in Medifast's revenue over the past 12 months. Losses are forecast to balloon 42% to 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. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.
See our latest analysis for Medifast
The analyst has cut their price target 9.1% to US$15.00per share, suggesting that the declining revenue was a more crucial indicator than the forecast reduction in losses.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. 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 3.7% 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. With that said, earnings are more important to the long-term value of the business. The consensus price target fell measurably, with the analyst seemingly not reassured by the latest results, leading to a lower estimate of Medifast's future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.
We don't want to rain on the parade too much, but we did also find 1 warning sign for Medifast 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.