Earnings Update: Here's Why Analysts Just Lifted Their Balchem Corporation (NASDAQ:BCPC) Price Target To US$184

The quarterly results for Balchem Corporation (NASDAQ:BCPC) were released last week, making it a good time to revisit its performance. Balchem missed revenue estimates by 2.3%, coming in atUS$234m, although statutory earnings per share (EPS) of US$0.98 beat expectations, coming in 4.6% ahead of analyst estimates. 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 Balchem

Taking into account the latest results, the consensus forecast from Balchem's three analysts is for revenues of US$952.6m in 2024. This reflects a reasonable 2.2% improvement in revenue compared to the last 12 months. Per-share earnings are expected to grow 12% to US$4.05. In the lead-up to this report, the analysts had been modelling revenues of US$973.7m and earnings per share (EPS) of US$3.89 in 2024. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.

The average price target rose 10.0% to US$184, with the analysts signalling that the improved earnings outlook is the key driver of value for shareholders - enough to offset the reduction in revenue estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Balchem, with the most bullish analyst valuing it at US$206 and the most bearish at US$170 per share. 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.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Balchem's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 4.4% growth on an annualised basis. This is compared to a historical growth rate of 9.4% over the past five years. Compare this to the 122 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.7% per year. So it's pretty clear that, while Balchem's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Balchem's earnings potential next year. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. Yet - earnings 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 in mind, we wouldn't be too quick to come to a conclusion on Balchem. Long-term earnings power is much more important than next year's profits. We have forecasts for Balchem going out to 2026, and you can see them free on our platform here.

Even so, be aware that Balchem is showing 1 warning sign in our investment analysis , you should know about...

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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.

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