It's been a good week for Diversified Healthcare Trust (NASDAQ:DHC) shareholders, because the company has just released its latest third-quarter results, and the shares gained 3.3% to US$2.99. Revenues were in line with expectations, at US$394m, while statutory losses ballooned to US$0.45 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Diversified Healthcare Trust

Taking into account the latest results, the most recent consensus for Diversified Healthcare Trust from eight analysts is for revenues of US$1.61b in 2021 which, if met, would be a satisfactory 6.8% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 32% to US$0.50. Before this earnings announcement, the analysts had been modelling revenues of US$1.61b and losses of US$0.49 per share in 2021.

As a result, it's unexpected to see that the consensus price target fell 5.1% to US$3.75, with the analysts seemingly becoming more concerned about ongoing losses, despite making no major changes to their forecasts. 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. The most optimistic Diversified Healthcare Trust analyst has a price target of US$6.00 per share, while the most pessimistic values it at US$2.75. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Diversified Healthcare Trust's past performance and to peers in the same industry. It's clear from the latest estimates that Diversified Healthcare Trust's rate of growth is expected to accelerate meaningfully, with the forecast 6.8% revenue growth noticeably faster than its historical growth of 5.1%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.0% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Diversified Healthcare Trust is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. 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 estimates - from multiple Diversified Healthcare Trust analysts - going out to 2022, and you can see them free on our platform here.

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

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.