Earnings Beat: Embecta Corp. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Embecta Corp. (NASDAQ:EMBC) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 8.5% to hit US$287m. Embecta also reported a statutory profit of US$0.50, which was an impressive 614% above what the analysts had forecast. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Embecta

Following last week's earnings report, Embecta's four analysts are forecasting 2024 revenues to be US$1.12b, approximately in line with the last 12 months. Per-share earnings are expected to rise 6.8% to US$1.30. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.11b and earnings per share (EPS) of US$0.88 in 2024. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the massive increase in earnings per share expectations following these results.

The consensus price target fell 9.1% to US$15.00, suggesting the increase in earnings forecasts was not enough to offset other the analysts concerns. 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. The most optimistic Embecta analyst has a price target of US$17.00 per share, while the most pessimistic values it at US$13.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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 revenue is expected to reverse, with a forecast 3.0% annualised decline to the end of 2024. That is a notable change from historical growth of 1.3% over the last year. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.1% per year. It's pretty clear that Embecta's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Embecta 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 Embecta's revenue is expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Embecta's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Embecta analysts - going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 6 warning signs we've spotted with Embecta (including 3 which shouldn't be ignored) .

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.