Analysts Are Updating Their Evolution AB (publ) (STO:EVO) Estimates After Its First-Quarter Results

The quarterly results for Evolution AB (publ) (STO:EVO) were released last week, making it a good time to revisit its performance. It was a credible result overall, with revenues of €501m and statutory earnings per share of €1.25 both in line with analyst estimates, showing that Evolution is executing in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Evolution

Taking into account the latest results, the most recent consensus for Evolution from 15 analysts is for revenues of €2.12b in 2024. If met, it would imply a meaningful 13% increase on its revenue over the past 12 months. Per-share earnings are expected to increase 4.0% to €5.36. Yet prior to the latest earnings, the analysts had been anticipated revenues of €2.11b and earnings per share (EPS) of €5.29 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

There were no changes to revenue or earnings estimates or the price target of kr1,488, suggesting that the company has met expectations in its recent result. 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. There are some variant perceptions on Evolution, with the most bullish analyst valuing it at kr1,778 and the most bearish at kr930 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Evolution's past performance and to peers in the same industry. We would highlight that Evolution's revenue growth is expected to slow, with the forecast 18% annualised growth rate until the end of 2024 being well below the historical 36% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% annually. Even after the forecast slowdown in growth, it seems obvious that Evolution is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at kr1,488, with the latest estimates not enough to have an impact on their price targets.

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. We have forecasts for Evolution going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Evolution 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.