Earnings Update: Here's Why Analysts Just Lifted Their Ependion AB (STO:EPEN) Price Target To kr143

Last week, you might have seen that Ependion AB (STO:EPEN) released its quarterly result to the market. The early response was not positive, with shares down 3.7% to kr105 in the past week. Results were roughly in line with estimates, with revenues of kr599m and statutory earnings per share of kr6.93. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Ependion

Taking into account the latest results, Ependion's twin analysts currently expect revenues in 2024 to be kr2.46b, approximately in line with the last 12 months. Per-share earnings are expected to rise 6.5% to kr7.21. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr2.47b and earnings per share (EPS) of kr7.90 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

Despite cutting their earnings forecasts,the analysts have lifted their price target 8.3% to kr143, suggesting that these impacts are not expected to weigh on the stock's value in the long term.

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 would highlight that Ependion's revenue growth is expected to slow, with the forecast 0.9% annualised growth rate until the end of 2024 being well below the historical 13% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.1% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Ependion.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Ependion. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 least one analyst has provided forecasts out to 2026, which can be seen for free on our platform here.

It might also be worth considering whether Ependion's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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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.