Pharming Group N.V. Just Missed EPS By 56%: Here's What Analysts Think Will Happen Next

The analysts might have been a bit too bullish on Pharming Group N.V. (AMS:PHARM), given that the company fell short of expectations when it released its annual results last week. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at €168m, statutory earnings missed forecasts by an incredible 56%, coming in at just €0.021 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Pharming Group after the latest results.

See our latest analysis for Pharming Group

Taking into account the latest results, the consensus forecast from Pharming Group's three analysts is for revenues of €188.7m in 2022, which would reflect a meaningful 13% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 30% to €0.027. In the lead-up to this report, the analysts had been modelling revenues of €218.8m and earnings per share (EPS) of €0.04 in 2022. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.

Despite the cuts to forecast earnings, there was no real change to the €1.73 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. There are some variant perceptions on Pharming Group, with the most bullish analyst valuing it at €1.79 and the most bearish at €1.66 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

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. We would highlight that Pharming Group's revenue growth is expected to slow, with the forecast 13% annualised growth rate until the end of 2022 being well below the historical 24% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 21% annually. Factoring in the forecast slowdown in growth, it seems obvious that Pharming Group is also expected to grow slower than other industry participants.

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. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Pharming Group. 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 Pharming Group going out to 2024, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 1 warning sign for Pharming Group you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.