Shilpa Medicare Limited (NSE:SHILPAMED) Analysts Are Reducing Their Forecasts For Next Year

The latest analyst coverage could presage a bad day for Shilpa Medicare Limited (NSE:SHILPAMED), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

After the downgrade, the twin analysts covering Shilpa Medicare are now predicting revenues of ₹9.8b in 2022. If met, this would reflect a reasonable 7.8% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to plummet 21% to ₹16.90 in the same period. Before this latest update, the analysts had been forecasting revenues of ₹11b and earnings per share (EPS) of ₹24.90 in 2022. Indeed, we can see that the analysts are a lot more bearish about Shilpa Medicare's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Shilpa Medicare

It'll come as no surprise then, to learn that the analysts have cut their price target 11% to ₹543. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Shilpa Medicare analyst has a price target of ₹750 per share, while the most pessimistic values it at ₹336. 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 Shilpa Medicare's past performance and to peers in the same industry. The analysts are definitely expecting Shilpa Medicare's growth to accelerate, with the forecast 7.8% growth ranking favourably alongside historical growth of 5.1% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Shilpa Medicare is expected to grow slower than the wider industry.

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 Shilpa Medicare. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary 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 analyst estimates for Shilpa Medicare going out as far as 2023, 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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