Kainos Group plc (LON:KNOS) Just Reported And Analysts Have Been Lifting Their Price Targets

It's been a pretty great week for Kainos Group plc (LON:KNOS) shareholders, with its shares surging 16% to UK£12.20 in the week since its latest full-year results. Kainos Group reported in line with analyst predictions, delivering revenues of UK£382m and statutory earnings per share of UK£0.39, suggesting the business is executing well and in line with its plan. 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 Kainos Group

After the latest results, the ten analysts covering Kainos Group are now predicting revenues of UK£418.3m in 2025. If met, this would reflect a solid 9.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to accumulate 9.3% to UK£0.42. Before this earnings report, the analysts had been forecasting revenues of UK£422.4m and earnings per share (EPS) of UK£0.44 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 8.1% to UK£13.85, suggesting the revised estimates are not indicative of a weaker long-term future for the business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Kainos Group, with the most bullish analyst valuing it at UK£19.10 and the most bearish at UK£9.88 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Kainos Group's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 9.4% growth on an annualised basis. This is compared to a historical growth rate of 20% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.0% annually. Even after the forecast slowdown in growth, it seems obvious that Kainos Group is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Kainos Group analysts - going out to 2027, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Kainos Group .

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.