Earnings Beat: Magellan Financial Group Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Magellan Financial Group Limited (ASX:MFG) just released its annual report and things are looking bullish. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 20% higher than the analysts had forecast, at AU$379m, while EPS were AU$1.32 beating analyst models by 31%. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Magellan Financial Group

Following the recent earnings report, the consensus from eleven analysts covering Magellan Financial Group is for revenues of AU$268.8m in 2025. This implies a concerning 29% decline in revenue compared to the last 12 months. Statutory earnings per share are forecast to crater 45% to AU$0.73 in the same period. Before this earnings report, the analysts had been forecasting revenues of AU$272.8m and earnings per share (EPS) of AU$0.74 in 2025. 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 consensus price target rose 5.3% to AU$9.60despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Magellan Financial Group's earnings by assigning a price premium. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Magellan Financial Group at AU$10.50 per share, while the most bearish prices it at AU$8.20. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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 13% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 29% decline in revenue until the end of 2025. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 5.3% annually. So while a broad number of companies are forecast to grow, unfortunately Magellan Financial Group is expected to see its revenue affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 Magellan Financial Group analysts - going out to 2027, and you can see them free on our platform here.

Before you take the next step you should know about the 4 warning signs for Magellan Financial Group (2 are significant!) that we have uncovered.

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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.