It's shaping up to be a tough period for Dermapharm Holding SE (ETR:DMP), which a week ago released some disappointing second-quarter results that could have a notable impact on how the market views the stock. Results showed a clear earnings miss, with €186m revenue coming in 2.6% lower than what the analystsexpected. Statutory earnings per share (EPS) of €0.22 missed the mark badly, arriving some 44% below what was expected. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Dermapharm Holding from three analysts is for revenues of €804.0m in 2020 which, if met, would be a meaningful 8.1% increase on its sales over the past 12 months. Per-share earnings are expected to jump 22% to €1.92. Yet prior to the latest earnings, the analysts had been anticipated revenues of €805.3m and earnings per share (EPS) of €1.87 in 2020. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at €51.50, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. There are some variant perceptions on Dermapharm Holding, with the most bullish analyst valuing it at €55.00 and the most bearish at €48.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Dermapharm Holding's revenue growth is expected to slow, with forecast 8.1% increase next year well below the historical 22% growth over the last year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.1% next year. Even after the forecast slowdown in growth, it seems obvious that Dermapharm Holding is also 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, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at €51.50, with the latest estimates not enough to have an impact on their price targets.
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 Dermapharm Holding analysts - going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for Dermapharm Holding you should be aware of.
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