Earnings Update: Here's Why Analysts Just Lifted Their PolyPeptide Group AG (VTX:PPGN) Price Target To CHF31.29

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The investors in PolyPeptide Group AG's (VTX:PPGN) will be rubbing their hands together with glee today, after the share price leapt 25% to CHF27.20 in the week following its half-year results. PolyPeptide Group beat revenue forecasts by a solid 12%, hitting €167m. Statutory losses also blew out, with the loss per share reaching €0.80, some 40% bigger than the analysts expected. 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.

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Taking into account the latest results, the consensus forecast from PolyPeptide Group's four analysts is for revenues of €410.1m in 2025. This reflects a meaningful 11% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 67% to €0.35. Yet prior to the latest earnings, the analysts had been forecasting revenues of €399.9m and losses of €0.49 per share in 2025. So it seems there's been a definite increase in optimism about PolyPeptide Group's future following the latest consensus numbers, with a very promising decrease in the loss per share forecasts in particular.

View our latest analysis for PolyPeptide Group

The consensus price target rose 12% to CHF31.29, with the analysts encouraged by the higher revenue and lower forecast losses for next year. 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 PolyPeptide Group, with the most bullish analyst valuing it at CHF38.04 and the most bearish at CHF20.02 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await PolyPeptide Group shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that PolyPeptide Group's rate of growth is expected to accelerate meaningfully, with the forecast 24% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 9.7% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that PolyPeptide Group is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. 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.

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 PolyPeptide Group going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for PolyPeptide Group that you need to take into consideration.

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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.