LPP SA Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

A week ago, LPP SA (WSE:LPP) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. LPP delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting zł3.9b, some 11% above indicated. Statutory EPS were zł341, an impressive 99% ahead of forecasts. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for LPP

After the latest results, the twelve analysts covering LPP are now predicting revenues of zł15.9b in 2023. If met, this would reflect a major 32% improvement in sales compared to the last 12 months. Statutory per share are forecast to be zł586, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of zł14.6b and earnings per share (EPS) of zł488 in 2023. So it seems there's been a definite increase in optimism about LPP's future following the latest results, with a solid gain to the earnings per share forecasts in particular.

It will come as no surprise to learn that the analysts have increased their price target for LPP 12% to zł15,688on the back of these upgrades. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values LPP at zł23,464 per share, while the most bearish prices it at zł7,640. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

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. The analysts are definitely expecting LPP's growth to accelerate, with the forecast 25% annualised growth to the end of 2023 ranking favourably alongside historical growth of 11% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.4% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect LPP to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around LPP's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for LPP going out to 2024, and you can see them free on our platform here..

It is also worth noting that we have found 1 warning sign for LPP that you need to take into consideration.

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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.