Abcam plc (LON:ABC) last week reported its latest annual results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Statutory earnings per share fell badly short of expectations, coming in at UK£0.06, some 52% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at UK£260m. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from Abcam's nine analysts is for revenues of UK£298.9m in 2021, which would reflect a solid 15% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 166% to UK£0.16. In the lead-up to this report, the analysts had been modelling revenues of UK£300.9m and earnings per share (EPS) of UK£0.15 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 UK£12.78, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Abcam at UK£15.00 per share, while the most bearish prices it at UK£8.90. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Abcam shareholders.
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. The analysts are definitely expecting Abcam's growth to accelerate, with the forecast 15% growth ranking favourably alongside historical growth of 12% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.4% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Abcam to grow faster 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 Abcam's earnings potential next year. 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£12.78, 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 Abcam. Long-term earnings power is much more important than next year's profits. We have forecasts for Abcam going out to 2024, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Abcam that you should be aware of.
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