Fagron NV (EBR:FAGR) Just Reported Half-Year Earnings: Have Analysts Changed Their Mind On The Stock?

As you might know, Fagron NV (EBR:FAGR) recently reported its half-year numbers. Results were roughly in line with estimates, with revenues of €277m and statutory earnings per share of €0.83. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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 Fagron

Taking into account the latest results, the consensus forecast from Fagron's four analysts is for revenues of €593.9m in 2021, which would reflect a reasonable 7.2% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 22% to €0.93. In the lead-up to this report, the analysts had been modelling revenues of €587.4m and earnings per share (EPS) of €0.98 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The consensus price target held steady at €22.00, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Fagron at €27.00 per share, while the most bearish prices it at €18.50. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Fagron's growth to accelerate, with the forecast 15% annualised growth to the end of 2021 ranking favourably alongside historical growth of 7.1% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.2% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Fagron to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at €22.00, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Fagron going out to 2023, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Fagron that you need to be mindful of.

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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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