Earnings Miss: Recordati Industria Chimica e Farmaceutica S.p.A. Missed EPS By 8.5% And Analysts Are Revising Their Forecasts

Last week, you might have seen that Recordati Industria Chimica e Farmaceutica S.p.A. (BIT:REC) released its quarterly result to the market. The early response was not positive, with shares down 3.6% to €44.80 in the past week. It looks like the results were a bit of a negative overall. While revenues of €385m were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 8.5% to hit €0.43 per share. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Recordati Industria Chimica e Farmaceutica

Taking into account the latest results, the current consensus from Recordati Industria Chimica e Farmaceutica's nine analysts is for revenues of €1.58b in 2021, which would reflect a notable 13% increase on its sales over the past 12 months. Statutory earnings per share are predicted to grow 14% to €1.84. In the lead-up to this report, the analysts had been modelling revenues of €1.59b and earnings per share (EPS) of €1.89 in 2021. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The consensus price target held steady at €45.64, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Recordati Industria Chimica e Farmaceutica analyst has a price target of €53.50 per share, while the most pessimistic values it at €40.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Recordati Industria Chimica e Farmaceutica is an easy business to forecast or the the analysts are all using similar assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Recordati Industria Chimica e Farmaceutica's past performance and to peers in the same industry. It's clear from the latest estimates that Recordati Industria Chimica e Farmaceutica's rate of growth is expected to accelerate meaningfully, with the forecast 17% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 6.4% p.a. 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 4.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Recordati Industria Chimica e Farmaceutica 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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at €45.64, 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 Recordati Industria Chimica e Farmaceutica. 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 Recordati Industria Chimica e Farmaceutica going out to 2025, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 2 warning signs for Recordati Industria Chimica e Farmaceutica you should be aware of.

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This article by Simply Wall St is general in nature. 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.
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