Hikma Pharmaceuticals PLC Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Shareholders might have noticed that Hikma Pharmaceuticals PLC (LON:HIK) filed its annual result this time last week. The early response was not positive, with shares down 5.3% to UK£22.36 in the past week. Revenues were US$2.3b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$1.81 were also better than expected, beating analyst predictions by 11%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Hikma Pharmaceuticals

Taking into account the latest results, the consensus forecast from Hikma Pharmaceuticals' ten analysts is for revenues of US$2.51b in 2021, which would reflect an okay 7.4% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to shrink 4.5% to US$1.74 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.50b and earnings per share (EPS) of US$1.76 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.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$35.65. 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. Currently, the most bullish analyst values Hikma Pharmaceuticals at US$29.75 per share, while the most bearish prices it at US$13.68. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. We can infer from the latest estimates that forecasts expect a continuation of Hikma Pharmaceuticals'historical trends, as next year's 7.4% revenue growth is roughly in line with 7.5% annual revenue growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 8.2% next year. It's clear that while Hikma Pharmaceuticals' revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$35.65, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Hikma Pharmaceuticals going out to 2025, and you can see them free on our platform here.

It might also be worth considering whether Hikma Pharmaceuticals' debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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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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