Magellan Financial Group Limited (ASX:MFG) Just Beat Earnings: Here's What Analysts Think Will Happen Next

Magellan Financial Group Limited (ASX:MFG) just released its half-year report and things are looking bullish. Statutory earnings performance was extremely strong, with revenue of AU$179m beating expectations by 25% and earnings per share (EPS) of AU$0.52, an impressive 30%ahead of expectations. 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.

Check out our latest analysis for Magellan Financial Group

Taking into account the latest results, the ten analysts covering Magellan Financial Group provided consensus estimates of AU$297.6m revenue in 2025, which would reflect a concerning 23% decline over the past 12 months. Statutory earnings per share are expected to dive 28% to AU$0.92 in the same period. Before this earnings report, the analysts had been forecasting revenues of AU$280.3m and earnings per share (EPS) of AU$0.86 in 2025. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

Despite these upgrades, the consensus price target fell 5.6% to AU$9.42, perhaps signalling that the uplift in performance is not expected to last. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Magellan Financial Group at AU$11.64 per share, while the most bearish prices it at AU$8.20. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Magellan Financial Group shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One more thing stood out to us about these estimates, and it's the idea that Magellan Financial Group's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 41% to the end of 2025. This tops off a historical decline of 16% a year over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 4.4% 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 biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Magellan Financial Group's earnings potential next year. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Magellan Financial Group'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. 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 2 warning signs for Magellan Financial Group (1 is concerning!) that we have uncovered.

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

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.