Stock Analysis

Analyst Estimates: Here's What Brokers Think Of Zydus Lifesciences Limited (NSE:ZYDUSLIFE) After Its Third-Quarter Report

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Investors in Zydus Lifesciences Limited (NSE:ZYDUSLIFE) had a good week, as its shares rose 5.8% to close at ₹805 following the release of its quarterly results. Results were roughly in line with estimates, with revenues of ₹45b and statutory earnings per share of ₹7.80. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Zydus Lifesciences

NSEI:ZYDUSLIFE Earnings and Revenue Growth February 12th 2024

Taking into account the latest results, the consensus forecast from Zydus Lifesciences' 28 analysts is for revenues of ₹208.9b in 2025. This reflects a decent 9.8% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 22% to ₹35.51. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹208.0b and earnings per share (EPS) of ₹33.87 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of ₹723, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's 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 Zydus Lifesciences analyst has a price target of ₹913 per share, while the most pessimistic values it at ₹550. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2025 brings more of the same, according to the analysts, with revenue forecast to display 7.8% growth on an annualised basis. That is in line with its 6.7% annual growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 11% annually. So although Zydus Lifesciences is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Zydus Lifesciences following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at ₹723, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Zydus Lifesciences. Long-term earnings power is much more important than next year's profits. We have forecasts for Zydus Lifesciences going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Zydus Lifesciences that you need to be mindful of.

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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.