Stock Analysis

EKF Diagnostics Holdings plc Just Missed EPS By 22%: Here's What Analysts Think Will Happen Next

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AIM:EKF
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Shareholders will be ecstatic, with their stake up 22% over the past week following EKF Diagnostics Holdings plc's (LON:EKF) latest full-year results. It looks like a pretty bad result, all things considered. Although revenues of UK£65m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 22% to hit UK£0.024 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.

Check out our latest analysis for EKF Diagnostics Holdings

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AIM:EKF Earnings and Revenue Growth April 1st 2021

Taking into account the latest results, the current consensus, from the dual analysts covering EKF Diagnostics Holdings, is for revenues of UK£60.4m in 2021, which would reflect a noticeable 7.4% reduction in EKF Diagnostics Holdings' sales over the past 12 months. Statutory earnings per share are expected to plummet 29% to UK£0.017 in the same period. In the lead-up to this report, the analysts had been modelling revenues of UK£54.4m and earnings per share (EPS) of UK£0.015 in 2021. So we can see there's been a pretty clear increase in sentiment following the latest results, with both revenues and earnings per share receiving a decent lift in the latest estimates.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 27% to UK£0.65per share.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 7.4% by the end of 2021. This indicates a significant reduction from annual growth of 11% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 10% annually for the foreseeable future. It's pretty clear that EKF Diagnostics Holdings' revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around EKF Diagnostics Holdings' earnings potential next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At least one analyst has provided forecasts out to 2022, which can be seen for free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with EKF Diagnostics Holdings .

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