Earnings Miss: Hexagon AB (publ) Missed EPS By 19% And Analysts Are Revising Their Forecasts

As you might know, Hexagon AB (publ) (STO:HEXA B) recently reported its first-quarter numbers. Revenues were in line with forecasts, at €1.3b, although statutory earnings per share came in 19% below what the analysts expected, at €0.07 per share. 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.

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Following last week's earnings report, Hexagon's 16 analysts are forecasting 2025 revenues to be €5.48b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be €0.37, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of €5.56b and earnings per share (EPS) of €0.41 in 2025. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.

View our latest analysis for Hexagon

It might be a surprise to learn that the consensus price target fell 5.2% to kr113, with the analysts clearly linking lower forecast earnings to the performance of the stock price. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Hexagon analyst has a price target of kr152 per share, while the most pessimistic values it at kr94.44. 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. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Hexagon's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Hexagon's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 1.4% growth on an annualised basis. This is compared to a historical growth rate of 8.9% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.4% annually. Factoring in the forecast slowdown in growth, it seems obvious that Hexagon is also expected to grow slower than other industry participants.

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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Hexagon's revenue is expected to perform worse than the wider industry. 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Hexagon analysts - going out to 2027, and you can see them free on our platform here.

You can also view our analysis of Hexagon's balance sheet, and whether we think Hexagon is carrying too much debt, for free on our 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.