Mentice AB (publ) Just Reported A Surprise Loss: Here's What Analysts Think Will Happen Next

It's been a sad week for Mentice AB (publ) (STO:MNTC), who've watched their investment drop 15% to kr30.20 in the week since the company reported its first-quarter result. Revenues fell badly short of expectations, with revenue of kr45m missing analyst predictions by 42%. Unsurprisingly, the statutory profit the analysts had been forecasting evaporated, turning into a loss of kr0.96 per share. 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 Mentice

After the latest results, the three analysts covering Mentice are now predicting revenues of kr283.6m in 2024. If met, this would reflect a solid 11% improvement in revenue compared to the last 12 months. Mentice is also expected to turn profitable, with statutory earnings of kr0.89 per share. Before this earnings report, the analysts had been forecasting revenues of kr335.4m and earnings per share (EPS) of kr0.78 in 2024. There's been a definite change in sentiment after these results, with the analysts delivering a to next year's revenue estimates, while at the same time substantially upgrading EPS. It's almost as though the business is anticipated to reduce its focus on growth to enhance profitability.

The consensus price target fell 9.6% to kr50.00, with the analysts signalling that the weaker revenue outlook was a more powerful indicator than the upgraded EPS forecasts. 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. The most optimistic Mentice analyst has a price target of kr61.00 per share, while the most pessimistic values it at kr34.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Mentice's past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Mentice'shistorical trends, as the 15% annualised revenue growth to the end of 2024 is roughly in line with the 14% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 14% per year. It's clear that while Mentice's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Mentice's earnings potential next year. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. Still, earnings are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 estimates - from multiple Mentice analysts - 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 Mentice that you need to take into consideration.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.