Stock Analysis

Earnings Miss: Neogen Chemicals Limited Missed EPS By 6.7% And Analysts Are Revising Their Forecasts

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NSEI:NEOGEN

Last week, you might have seen that Neogen Chemicals Limited (NSE:NEOGEN) released its second-quarter result to the market. The early response was not positive, with shares down 6.5% to ₹1,984 in the past week. It looks like the results were a bit of a negative overall. While revenues of ₹1.9b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 6.7% to hit ₹4.15 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Neogen Chemicals after the latest results.

See our latest analysis for Neogen Chemicals

NSEI:NEOGEN Earnings and Revenue Growth November 16th 2024

Following the latest results, Neogen Chemicals' seven analysts are now forecasting revenues of ₹8.52b in 2025. This would be a notable 16% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 35% to ₹20.60. In the lead-up to this report, the analysts had been modelling revenues of ₹9.08b and earnings per share (EPS) of ₹22.40 in 2025. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

Despite the cuts to forecast earnings, there was no real change to the ₹2,274 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Neogen Chemicals analyst has a price target of ₹3,600 per share, while the most pessimistic values it at ₹1,600. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Neogen Chemicals' past performance and to peers in the same industry. The analysts are definitely expecting Neogen Chemicals' growth to accelerate, with the forecast 34% annualised growth to the end of 2025 ranking favourably alongside historical growth of 22% 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 13% 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. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target held steady at ₹2,274, 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 Neogen Chemicals. Long-term earnings power is much more important than next year's profits. We have forecasts for Neogen Chemicals going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - Neogen Chemicals has 3 warning signs (and 2 which can't be ignored) we think you should know about.

Valuation is complex, but we're here to simplify it.

Discover if Neogen Chemicals might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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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.