Medistim ASA (OB:MEDI) Just Reported And Analysts Have Been Lifting Their Price Targets

Medistim ASA (OB:MEDI) last week reported its latest full-year results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks like the results were a bit of a negative overall. While revenues of kr363m were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 2.8% to hit kr3.80 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Medistim

After the latest results, the twin analysts covering Medistim are now predicting revenues of kr422.2m in 2021. If met, this would reflect a notable 16% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 25% to kr4.76. In the lead-up to this report, the analysts had been modelling revenues of kr433.2m and earnings per share (EPS) of kr4.94 in 2021. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

What's most unexpected is that the consensus price target rose 7.7% to kr246, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

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. The analysts are definitely expecting Medistim's growth to accelerate, with the forecast 16% annualised growth to the end of 2021 ranking favourably alongside historical growth of 8.4% 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 8.3% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Medistim is expected to grow much faster than its 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. They also downgraded their revenue estimates, although industry data suggests that Medistim's revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Medistim. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.

Even so, be aware that Medistim is showing 1 warning sign in our investment analysis , you should know about...

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