Earnings Beat: NATCO Pharma Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

There's been a notable change in appetite for NATCO Pharma Limited (NSE:NATCOPHARM) shares in the week since its full-year report, with the stock down 13% to ₹1,016. The result was positive overall - although revenues of ₹41b were in line with what the analysts predicted, NATCO Pharma surprised by delivering a statutory profit of ₹79.20 per share, modestly greater than expected. 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.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

After the latest results, the consensus from NATCO Pharma's nine analysts is for revenues of ₹32.9b in 2027, which would reflect a not inconsiderable 19% decline in revenue compared to the last year of performance. Statutory earnings per share are forecast to tumble 48% to ₹41.50 in the same period. In the lead-up to this report, the analysts had been modelling revenues of ₹32.0b and earnings per share (EPS) of ₹39.13 in 2027. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

Check out our latest analysis for NATCO Pharma

Despite these upgrades,the analysts have not made any major changes to their price target of ₹977, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 NATCO Pharma, with the most bullish analyst valuing it at ₹1,180 and the most bearish at ₹712 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. We would highlight that revenue is expected to reverse, with a forecast 19% annualised decline to the end of 2027. That is a notable change from historical growth of 20% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 11% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - NATCO Pharma is expected to lag the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around NATCO Pharma's earnings potential next year. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. The consensus price target held steady at ₹977, 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. At Simply Wall St, we have a full range of analyst estimates for NATCO Pharma going out to 2029, and you can see them free on our platform here..

It is also worth noting that we have found 3 warning signs for NATCO Pharma (1 makes us a bit uncomfortable!) that you need to take into consideration.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.