The Consensus EPS Estimates For Neuland Laboratories Limited (NSE:NEULANDLAB) Just Fell Dramatically

One thing we could say about the analysts on Neuland Laboratories Limited (NSE:NEULANDLAB) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following this downgrade, Neuland Laboratories' three analysts are forecasting 2022 revenues to be ₹9.5b, approximately in line with the last 12 months. Statutory earnings per share are forecast to be ₹45.60, approximately in line with the last 12 months. Prior to this update, the analysts had been forecasting revenues of ₹11b and earnings per share (EPS) of ₹68.33 in 2022. Indeed, we can see that the analysts are a lot more bearish about Neuland Laboratories' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Neuland Laboratories

Analysts made no major changes to their price target of ₹1,829, suggesting the downgrades are not expected to have a long-term impact on Neuland Laboratories' valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Neuland Laboratories analyst has a price target of ₹2,499 per share, while the most pessimistic values it at ₹1,268. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Neuland Laboratories' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 0.6% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Neuland Laboratories.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Neuland Laboratories. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Neuland Laboratories' revenues are expected to grow slower than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Neuland Laboratories.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Neuland Laboratories going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.