Evotec SE (ETR:EVT) Just Reported Earnings, And Analysts Cut Their Target Price

Investors in Evotec SE (ETR:EVT) had a good week, as its shares rose 4.5% to close at €5.80 following the release of its half-yearly results. Revenues were in line with expectations, at €391m, while statutory losses ballooned to €0.54 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Evotec

Taking into account the latest results, the consensus forecast from Evotec's twelve analysts is for revenues of €829.8m in 2024. This reflects an okay 5.2% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 54% to €0.45. Before this earnings announcement, the analysts had been modelling revenues of €866.8m and losses of €0.36 per share in 2024. While this year's revenue estimates dropped there was also a considerable increase to loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

The average price target fell 14% to €15.40, implicitly signalling that lower earnings per share are a leading indicator for Evotec'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. The most optimistic Evotec analyst has a price target of €30.00 per share, while the most pessimistic values it at €4.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Evotec's past performance and to peers in the same industry. We would highlight that Evotec's revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2024 being well below the historical 15% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 11% annually. Factoring in the forecast slowdown in growth, it looks like Evotec is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Evotec. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Evotec. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Evotec going out to 2026, and you can see them free on our platform here..

Before you take the next step you should know about the 1 warning sign for Evotec that we have uncovered.

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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.