The analysts might have been a bit too bullish on Dermapharm Holding SE (ETR:DMP), given that the company fell short of expectations when it released its quarterly results last week. Results look to have been somewhat negative - revenue fell 2.2% short of analyst estimates at €199m, and statutory earnings of €0.42 per share missed forecasts by 7.7%. 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.
Following the latest results, Dermapharm Holding's three analysts are now forecasting revenues of €899.0m in 2021. This would be a meaningful 16% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 57% to €2.33. In the lead-up to this report, the analysts had been modelling revenues of €880.7m and earnings per share (EPS) of €2.25 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of €52.00, suggesting that the forecast performance does not have a long term impact on the company's valuation. 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 Dermapharm Holding at €55.00 per share, while the most bearish prices it at €48.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Dermapharm Holding's past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Dermapharm Holding'shistorical trends, as next year's 16% revenue growth is roughly in line with 15% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 3.8% per year. So although Dermapharm Holding is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Dermapharm Holding's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. The consensus price target held steady at €52.00, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Dermapharm Holding. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Dermapharm Holding analysts - going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - Dermapharm Holding has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.
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