Stock Analysis

AFT Pharmaceuticals Limited Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

  •  Updated
NZSE:AFT
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AFT Pharmaceuticals Limited (NZSE:AFT) missed earnings with its latest half-yearly results, disappointing overly-optimistic forecasters. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at NZ$49m, statutory earnings missed forecasts by an incredible 55%, coming in at just NZ$0.01 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for AFT Pharmaceuticals

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NZSE:AFT Earnings and Revenue Growth November 21st 2020

Taking into account the latest results, the most recent consensus for AFT Pharmaceuticals from four analysts is for revenues of NZ$117.9m in 2021 which, if met, would be a decent 9.7% increase on its sales over the past 12 months. Per-share earnings are expected to surge 294% to NZ$0.11. Before this earnings report, the analysts had been forecasting revenues of NZ$123.8m and earnings per share (EPS) of NZ$0.13 in 2021. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a substantial drop in earnings per share numbers.

The analysts made no major changes to their price target of NZ$5.75, suggesting the downgrades are not expected to have a long-term impact on AFT Pharmaceuticals' 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. There are some variant perceptions on AFT Pharmaceuticals, with the most bullish analyst valuing it at NZ$6.50 and the most bearish at NZ$5.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of AFT Pharmaceuticals'historical trends, as next year's 9.7% revenue growth is roughly in line with 12% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 33% per year. So it's pretty clear that AFT Pharmaceuticals is expected to grow slower than similar companies in the same 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. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for AFT Pharmaceuticals going out to 2023, and you can see them free on our platform here.

Even so, be aware that AFT Pharmaceuticals is showing 3 warning signs in our investment analysis , and 1 of those is significant...

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