Imdex Limited Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

As you might know, Imdex Limited (ASX:IMD) just kicked off its latest interim results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 6.6% to hit AU$124m. Imdex also reported a statutory profit of AU$0.034, which was an impressive 90% above what the analysts had forecast. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Imdex

Taking into account the latest results, the most recent consensus for Imdex from six analysts is for revenues of AU$255.1m in 2021 which, if met, would be a modest 7.2% increase on its sales over the past 12 months. Statutory earnings per share are predicted to soar 41% to AU$0.061. Before this earnings report, the analysts had been forecasting revenues of AU$243.9m and earnings per share (EPS) of AU$0.037 in 2021. So it seems there's been a definite increase in optimism about Imdex's future following the latest results, with a massive increase in the earnings per share forecasts in particular.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 24% to AU$1.93per share. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Imdex at AU$2.20 per share, while the most bearish prices it at AU$1.60. 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. It's pretty clear that there is an expectation that Imdex's revenue growth will slow down substantially, with revenues next year expected to grow 7.2%, compared to a historical growth rate of 12% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 1.6% next year. So it's pretty clear that, while Imdex's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Imdex following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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 Imdex analysts - going out to 2023, 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 3 warning signs with Imdex , and understanding these should be part of your investment process.

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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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