Earnings Update: Wright Medical Group N.V. (NASDAQ:WMGI) Just Reported Its Third-Quarter Results And Analysts Are Updating Their Forecasts

Wright Medical Group N.V. (NASDAQ:WMGI) defied analyst predictions to release its quarterly results, which were ahead of market expectations. Revenues and losses per share were both better than expected, with revenues of US$223m leading estimates by 9.7%. Statutory losses were smaller than the analystsexpected, coming in at US$0.13 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Wright Medical Group

Following the latest results, Wright Medical Group's six analysts are now forecasting revenues of US$1.06b in 2021. This would be a substantial 29% improvement in sales compared to the last 12 months. Wright Medical Group is also expected to turn profitable, with statutory earnings of US$0.20 per share. Before this earnings report, the analysts had been forecasting revenues of US$1.05b and earnings per share (EPS) of US$0.20 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$30.67. 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. There are some variant perceptions on Wright Medical Group, with the most bullish analyst valuing it at US$31.00 and the most bearish at US$30.00 per share. This is a very narrow spread of estimates, implying either that Wright Medical Group is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

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. It's clear from the latest estimates that Wright Medical Group's rate of growth is expected to accelerate meaningfully, with the forecast 29% revenue growth noticeably faster than its historical growth of 13%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 10.0% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Wright Medical Group to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$30.67, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Wright Medical Group going out to 2023, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Wright Medical Group that you should be aware of.

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