Faes Farma, S.A. (BME:FAE) Interim Results: Here's What Analysts Are Forecasting For This Year

Last week saw the newest half-yearly earnings release from Faes Farma, S.A. (BME:FAE), an important milestone in the company's journey to build a stronger business. Results look mixed - while revenue fell marginally short of analyst estimates at €192m, statutory earnings were in line with expectations, at €0.25 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Faes Farma

Taking into account the latest results, the consensus forecast from Faes Farma's six analysts is for revenues of €409.3m in 2021, which would reflect an okay 2.8% improvement in sales compared to the last 12 months. Statutory per share are forecast to be €0.26, approximately in line with the last 12 months. Before this earnings report, the analysts had been forecasting revenues of €414.6m and earnings per share (EPS) of €0.26 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

There were no changes to revenue or earnings estimates or the price target of €4.05, suggesting that the company has met expectations in its recent result. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Faes Farma analyst has a price target of €4.75 per share, while the most pessimistic values it at €3.60. This is a very narrow spread of estimates, implying either that Faes Farma is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Faes Farma's revenue growth is expected to slow, with the forecast 5.7% annualised growth rate until the end of 2021 being well below the historical 13% p.a. growth over the last five years. Compare this to the 135 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 5.6% per year. Factoring in the forecast slowdown in growth, it looks like Faes Farma is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall 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 forecasts for Faes Farma going out to 2023, and you can see them free on our platform here.

Even so, be aware that Faes Farma is showing 2 warning signs in our investment analysis , you should know about...

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