HMS Networks AB (publ) (STO:HMS) Just Reported And Analysts Have Been Lifting Their Price Targets

Last week, you might have seen that HMS Networks AB (publ) (STO:HMS) released its yearly result to the market. The early response was not positive, with shares down 5.4% to kr473 in the past week. It was a credible result overall, with revenues of kr3.0b and statutory earnings per share of kr12.19 both in line with analyst estimates, showing that HMS Networks 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for HMS Networks

Following the recent earnings report, the consensus from three analysts covering HMS Networks is for revenues of kr2.95b in 2024. This implies a perceptible 2.5% decline in revenue compared to the last 12 months. Statutory earnings per share are forecast to fall 19% to kr9.95 in the same period. Before this earnings report, the analysts had been forecasting revenues of kr3.14b and earnings per share (EPS) of kr10.29 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

The average price target climbed 6.6% to kr473despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic HMS Networks analyst has a price target of kr495 per share, while the most pessimistic values it at kr450. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

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. We would highlight that revenue is expected to reverse, with a forecast 2.5% annualised decline to the end of 2024. That is a notable change from historical growth of 18% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.2% per year. It's pretty clear that HMS Networks' revenues are expected to perform substantially worse than the wider industry.

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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for HMS Networks going out to 2026, and you can see them free on our platform here..

We also provide an overview of the HMS Networks Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, 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.