It's been a sad week for Photocure ASA (OB:PHO), who've watched their investment drop 13% to kr121 in the week since the company reported its quarterly result. Overall the results were a little better than the analysts were expecting, with revenues beating forecasts by 3.4%to hit kr90m. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the dual analysts covering Photocure are now predicting revenues of kr368.0m in 2021. If met, this would reflect a meaningful 13% improvement in sales compared to the last 12 months. Earnings are expected to tip over into lossmaking territory, with the analysts forecasting statutory losses of -kr0.071 per share in 2021. Before this earnings report, the analysts had been forecasting revenues of kr381.3m and earnings per share (EPS) of kr0.87 in 2021. The analysts have made an abrupt about-face on Photocure, administering a small dip in to revenue forecasts and slashing the earnings outlook from a profit to loss.
There was no major change to the consensus price target of kr160, signalling that the business is performing roughly in line with expectations, despite lower earnings per share forecasts.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Photocure's rate of growth is expected to accelerate meaningfully, with the forecast 27% annualised revenue growth to the end of 2021 noticeably faster than its historical growth of 19% 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 5.9% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Photocure to grow faster than the wider industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Photocure dropped from profits to a loss next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target held steady at kr160, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for Photocure you should be aware 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.
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