Stock Analysis

Glenmark Life Sciences Limited Recorded A 7.3% Miss On Revenue: Analysts Are Revisiting Their Models

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Glenmark Life Sciences Limited (NSE:GLS) shareholders are probably feeling a little disappointed, since its shares fell 3.2% to ₹449 in the week after its latest quarterly results. Results look mixed - while revenue fell marginally short of analyst estimates at ₹5.0b, statutory earnings were in line with expectations, at ₹35.63 per share. 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. 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 Glenmark Life Sciences

NSEI:GLS Earnings and Revenue Growth August 7th 2022

Following the latest results, Glenmark Life Sciences' four analysts are now forecasting revenues of ₹22.8b in 2023. This would be a solid 8.7% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 8.6% to ₹37.81. Before this earnings report, the analysts had been forecasting revenues of ₹24.1b and earnings per share (EPS) of ₹39.08 in 2023. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

The consensus price target fell 5.4% to ₹625, with the weaker earnings outlook clearly leading valuation estimates. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Glenmark Life Sciences, with the most bullish analyst valuing it at ₹682 and the most bearish at ₹613 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Glenmark Life Sciences is an easy business to forecast or the the analysts are all using similar assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Glenmark Life Sciences' growth to accelerate, with the forecast 12% annualised growth to the end of 2023 ranking favourably alongside historical growth of 4.0% per annum over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Glenmark Life Sciences is expected to grow at about the same rate as 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. Sadly, they also downgraded their sales forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. 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.

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 Glenmark Life Sciences analysts - going out to 2025, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Glenmark Life Sciences you should be aware of.

Valuation is complex, but we're helping make it simple.

Find out whether Glenmark Life Sciences is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.