NATCO Pharma Limited (NSE:NATCOPHARM) Just Recorded An Earnings Miss And Analysts Are Updating Their Numbers

It's shaping up to be a tough period for NATCO Pharma Limited (NSE:NATCOPHARM), which a week ago released some disappointing third-quarter results that could have a notable impact on how the market views the stock. The analysts look to have been far too optimistic in the lead-up to these results, with revenues of (₹4.7b) coming in 45% below what they had expected. Statutory earnings per share of ₹7.43 fell 44% short. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for NATCO Pharma

Taking into account the latest results, the consensus forecast from NATCO Pharma's eleven analysts is for revenues of ₹52.6b in 2026. This reflects a huge 23% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to step up 10% to ₹115. Before this earnings report, the analysts had been forecasting revenues of ₹55.8b and earnings per share (EPS) of ₹123 in 2026. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

The consensus price target fell 15% to ₹1,153, with the weaker earnings outlook clearly leading valuation estimates. 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. Currently, the most bullish analyst values NATCO Pharma at ₹1,675 per share, while the most bearish prices it at ₹710. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the NATCO Pharma's past performance and to peers in the same industry. The period to the end of 2026 brings more of the same, according to the analysts, with revenue forecast to display 18% growth on an annualised basis. That is in line with its 20% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 11% per year. So although NATCO Pharma 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. 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 fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of NATCO Pharma's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on NATCO Pharma. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for NATCO Pharma going out to 2027, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with NATCO Pharma (at least 1 which shouldn't be ignored) , and understanding these should be part of your investment process.

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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.