HMS Networks AB (publ) Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

A week ago, HMS Networks AB (publ) (STO:HMS) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 4.3% to hit kr890m. HMS Networks reported statutory earnings per share (EPS) kr2.29, which was a notable 19% above what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Taking into account the latest results, the consensus forecast from HMS Networks' four analysts is for revenues of kr3.78b in 2025. This reflects a decent 14% improvement in revenue compared to the last 12 months. Per-share earnings are expected to surge 75% to kr11.07. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr3.68b and earnings per share (EPS) of kr10.20 in 2025. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

View our latest analysis for HMS Networks

Despite these upgrades,the analysts have not made any major changes to their price target of kr535, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values HMS Networks at kr615 per share, while the most bearish prices it at kr440. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The period to the end of 2025 brings more of the same, according to the analysts, with revenue forecast to display 18% growth on an annualised basis. That is in line with its 18% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 2.4% annually. So it's pretty clear that HMS Networks is forecast to grow substantially faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around HMS Networks' earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. The consensus price target held steady at kr535, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on HMS Networks. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for HMS Networks going out to 2027, and you can see them free on our platform here..

It is also worth noting that we have found 2 warning signs for HMS Networks 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.