Platinum Investment Management Limited Just Recorded A 32% EPS Beat: Here's What Analysts Are Forecasting Next

It's been a good week for Platinum Investment Management Limited (ASX:PTM) shareholders, because the company has just released its latest half-yearly results, and the shares gained 7.4% to AU$4.63. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at AU$131m, statutory earnings beat expectations by a notable 32%, coming in at AU$0.15 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Platinum Investment Management

Following the recent earnings report, the consensus from nine analysts covering Platinum Investment Management is for revenues of AU$286.0m in 2021, implying an uncomfortable 8.1% decline in sales compared to the last 12 months. Statutory earnings per share are expected to decrease 2.0% to AU$0.28 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$273.3m and earnings per share (EPS) of AU$0.24 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a nice increase in earnings per share in particular.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 6.2% to AU$4.04per share. 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. There are some variant perceptions on Platinum Investment Management, with the most bullish analyst valuing it at AU$4.79 and the most bearish at AU$3.25 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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 Platinum Investment Management'sdecline is expected to accelerate, with revenues forecast to fall 8.1% next year, topping off a historical decline of 3.2% a year over the past five years. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to grow 5.2% next year. So while a broad number of companies are forecast to decline, unfortunately Platinum Investment Management is expected to see its sales 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 Platinum Investment Management's earnings potential next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Platinum Investment Management going out to 2023, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 4 warning signs for Platinum Investment Management you should be aware of, and 2 of them are a bit concerning.

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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.
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