Zealand Pharma A/S (CPH:ZEAL) Just Released Its Second-Quarter Earnings: Here's What Analysts Think

Investors in Zealand Pharma A/S (CPH:ZEAL) had a good week, as its shares rose 6.9% to close at kr.951 following the release of its second-quarter results. Revenues came in 274% better than analyst models expected, at kr.34m, although statutory losses were 12% larger than expected, at kr.4.67 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Zealand Pharma

Taking into account the latest results, the current consensus from Zealand Pharma's eight analysts is for revenues of kr.631.8m in 2024. This would reflect a substantial 72% increase on its revenue over the past 12 months. Losses are expected to increase slightly, to kr.10.97 per share. Before this earnings announcement, the analysts had been modelling revenues of kr.610.5m and losses of kr.9.68 per share in 2024. While this year's revenue estimates increased, there was also a noticeable increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.

There was no major change to the consensus price target of kr.1,015, with growing revenues seemingly enough to offset the concern of growing losses. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Zealand Pharma analyst has a price target of kr.1,106 per share, while the most pessimistic values it at kr.800. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Zealand Pharma's growth to accelerate, with the forecast 195% annualised growth to the end of 2024 ranking favourably alongside historical growth of 21% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 20% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Zealand Pharma to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 estimates - from multiple Zealand Pharma analysts - going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for Zealand Pharma you should know about.

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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.