Neogen Chemicals Limited (NSE:NEOGEN) Just Reported Earnings, And Analysts Cut Their Target Price

Last week saw the newest quarterly earnings release from Neogen Chemicals Limited (NSE:NEOGEN), an important milestone in the company's journey to build a stronger business. Results overall were respectable, with statutory earnings of ₹18.70 per share roughly in line with what the analysts had forecast. Revenues of ₹1.5b came in 2.3% ahead of analyst predictions. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Neogen Chemicals

After the latest results, the five analysts covering Neogen Chemicals are now predicting revenues of ₹6.39b in 2023. If met, this would reflect a decent 16% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 42% to ₹27.63. Before this earnings report, the analysts had been forecasting revenues of ₹6.42b and earnings per share (EPS) of ₹29.68 in 2023. 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.

The average price target fell 9.3% to ₹1,683, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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. There are some variant perceptions on Neogen Chemicals, with the most bullish analyst valuing it at ₹1,930 and the most bearish at ₹1,509 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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 period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 22% growth on an annualised basis. That is in line with its 22% annual growth over the past three years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 12% annually. So although Neogen Chemicals is expected to maintain its revenue growth rate, it's definitely 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 sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 Neogen Chemicals analysts - going out to 2025, and you can see them free on our platform here.

Even so, be aware that Neogen Chemicals is showing 1 warning sign in our investment analysis , you should know about...

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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.