PharmaEssentia Corporation (GTSM:6446) Just Reported And Analysts Have Been Cutting Their Estimates

PharmaEssentia Corporation (GTSM:6446) just released its latest yearly report and things are not looking great. It was not a great statutory result, with revenues coming in 26% lower than the analysts predicted. Unsurprisingly, earnings also fell seriously short of forecasts, turning into a per-share loss of NT$8.04. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for PharmaEssentia

Taking into account the latest results, the consensus forecast from PharmaEssentia's three analysts is for revenues of NT$1.82b in 2021, which would reflect a huge 227% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 33% to NT$5.36. Yet prior to the latest earnings, the analysts had been forecasting revenues of NT$2.09b and losses of NT$2.35 per share in 2021. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The average price target lifted 5.5% to NT$109, clearly signalling that the weaker revenue and EPS outlook are not expected to weigh on the stock over the longer term. 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. Currently, the most bullish analyst values PharmaEssentia at NT$137 per share, while the most bearish prices it at NT$90.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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 analysts are definitely expecting PharmaEssentia's growth to accelerate, with the forecast 227% annualised growth to the end of 2021 ranking favourably alongside historical growth of 79% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 81% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect PharmaEssentia to grow faster than the wider industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at PharmaEssentia. They also downgraded their revenue estimates, although industry data suggests that PharmaEssentia's revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on PharmaEssentia. 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 PharmaEssentia going out to 2022, and you can see them free on our platform here..

Plus, you should also learn about the 2 warning signs we've spotted with PharmaEssentia .

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