Earnings Miss: Neogen Chemicals Limited Missed EPS By 24% And Analysts Are Revising Their Forecasts

As you might know, Neogen Chemicals Limited (NSE:NEOGEN) last week released its latest full-year, and things did not turn out so great for shareholders. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at ₹6.9b, statutory earnings missed forecasts by an incredible 24%, coming in at just ₹13.96 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Neogen Chemicals

Taking into account the latest results, the consensus forecast from Neogen Chemicals' five analysts is for revenues of ₹9.70b in 2025. This reflects a huge 40% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 125% to ₹30.37. Before this earnings report, the analysts had been forecasting revenues of ₹9.59b and earnings per share (EPS) of ₹31.00 in 2025. 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.

It might be a surprise to learn that the consensus price target was broadly unchanged at ₹1,650, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 Neogen Chemicals, with the most bullish analyst valuing it at ₹1,860 and the most bearish at ₹1,385 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

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. The analysts are definitely expecting Neogen Chemicals' growth to accelerate, with the forecast 40% annualised growth to the end of 2025 ranking favourably alongside historical growth of 24% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Neogen Chemicals 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 Neogen Chemicals. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at ₹1,650, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Neogen Chemicals analysts - going out to 2027, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for Neogen Chemicals (2 are potentially serious!) that you should be aware of.

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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.