Xebec Adsorption Inc. (TSE:XBC) Just Reported And Analysts Have Been Cutting Their Estimates

Shareholders might have noticed that Xebec Adsorption Inc. (TSE:XBC) filed its yearly result this time last week. The early response was not positive, with shares down 4.2% to CA$4.29 in the past week. It was a pretty bad result overall; while revenues were in line with expectations at CA$57m, statutory losses exploded to CA$0.33 per share. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Xebec Adsorption

Taking into account the latest results, the consensus forecast from Xebec Adsorption's eleven analysts is for revenues of CA$127.3m in 2021, which would reflect a substantial 125% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Xebec Adsorption forecast to report a statutory profit of CA$0.022 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$142.2m and earnings per share (EPS) of CA$0.039 in 2021. It looks like sentiment has declined substantially in the aftermath of these results, with a real cut to revenue estimates and a pretty serious reduction to earnings per share numbers as well.

The consensus price target fell 15% to CA$6.10, with the weaker earnings outlook clearly leading valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Xebec Adsorption analyst has a price target of CA$10.00 per share, while the most pessimistic values it at CA$4.50. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Xebec Adsorption's past performance and to peers in the same industry. The analysts are definitely expecting Xebec Adsorption's growth to accelerate, with the forecast 125% annualised growth to the end of 2021 ranking favourably alongside historical growth of 42% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 20% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Xebec Adsorption to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Xebec Adsorption. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster 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 Xebec Adsorption's future valuation.

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. At Simply Wall St, we have a full range of analyst estimates for Xebec Adsorption going out to 2024, and you can see them free on our platform here..

Plus, you should also learn about the 2 warning signs we've spotted with Xebec Adsorption (including 1 which is a bit unpleasant) .

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