Results: Advanced Medical Solutions Group plc Exceeded Expectations And The Consensus Has Updated Its Estimates

Investors in Advanced Medical Solutions Group plc (LON:AMS) had a good week, as its shares rose 3.9% to close at UK£2.38 following the release of its annual results. The result was positive overall - although revenues of UK£87m were in line with what the analysts predicted, Advanced Medical Solutions Group surprised by delivering a statutory profit of UK£0.039 per share, modestly greater than expected. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Advanced Medical Solutions Group

Following the latest results, Advanced Medical Solutions Group's six analysts are now forecasting revenues of UK£112.7m in 2021. This would be a sizeable 30% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 82% to UK£0.073. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£111.0m and earnings per share (EPS) of UK£0.075 in 2021. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The consensus price target held steady at UK£2.76, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. Currently, the most bullish analyst values Advanced Medical Solutions Group at UK£3.50 per share, while the most bearish prices it at UK£2.28. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Advanced Medical Solutions Group's rate of growth is expected to accelerate meaningfully, with the forecast 30% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 5.2% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 10% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Advanced Medical Solutions Group is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Advanced Medical Solutions Group. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at UK£2.76, 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 Advanced Medical Solutions Group. 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 Advanced Medical Solutions Group going out to 2025, and you can see them free on our platform here..

You still need to take note of risks, for example - Advanced Medical Solutions Group has 1 warning sign we think you should be aware of.

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This article by Simply Wall St is general in nature. 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.
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