Australian Clinical Labs Limited (ASX:ACL) Just Reported Half-Year Earnings: Have Analysts Changed Their Mind On The Stock?

Australian Clinical Labs Limited (ASX:ACL) last week reported its latest half-yearly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Australian Clinical Labs beat revenue expectations by 2.6%, recording sales of AU$538m. Statutory earnings per share (EPS) came in at AU$0.65, some 3.7% short of analyst estimates. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Australian Clinical Labs

After the latest results, the four analysts covering Australian Clinical Labs are now predicting revenues of AU$980.0m in 2022. If met, this would reflect a meaningful 17% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 38% to AU$0.91. Before this earnings report, the analysts had been forecasting revenues of AU$941.6m and earnings per share (EPS) of AU$0.90 in 2022. There doesn't appear to have been a major change in sentiment following the results, other than the small increase to revenue estimates.

Even though revenue forecasts increased, there was no change to the consensus price target of AU$5.85, suggesting the analysts are focused on earnings as the driver of value creation. 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 Australian Clinical Labs, with the most bullish analyst valuing it at AU$6.50 and the most bearish at AU$5.20 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of Australian Clinical Labs'historical trends, as the 37% annualised revenue growth to the end of 2022 is roughly in line with the 45% annual revenue growth over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 2.0% per year. So although Australian Clinical Labs is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Australian Clinical Labs. Long-term earnings power is much more important than next year's profits. We have forecasts for Australian Clinical Labs going out to 2024, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Australian Clinical Labs (at least 1 which makes us a bit uncomfortable) , and understanding these should be part of your investment process.

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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.