Ambu A/S (CPH:AMBU B) just released its latest quarterly results and things are looking bullish. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 13% higher than the analysts had forecast, at kr.1.0b, while EPS were kr.0.36 beating analyst models by 194%. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, Ambu's eight analysts are now forecasting revenues of kr.4.17b in 2021. This would be a meaningful 9.3% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to ascend 19% to kr.1.38. Before this earnings report, the analysts had been forecasting revenues of kr.4.17b and earnings per share (EPS) of kr.1.32 in 2021. 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 kr.213, 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 Ambu, with the most bullish analyst valuing it at kr.281 and the most bearish at kr.126 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Ambu's revenue growth is expected to slow, with forecast 9.3% increase next year well below the historical 12%p.a. growth over the last five years. Compare this to the 7 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 10% per year. So it's pretty clear that, while Ambu's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Ambu following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at kr.213, 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 Ambu. Long-term earnings power is much more important than next year's profits. We have forecasts for Ambu going out to 2025, and you can see them free on our platform here.
You still need to take note of risks, for example - Ambu has 3 warning signs we think you should be aware of.
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