Earnings Update: Here's Why Analysts Just Lifted Their Emergent BioSolutions Inc. (NYSE:EBS) Price Target To US$13.50

The investors in Emergent BioSolutions Inc.'s (NYSE:EBS) will be rubbing their hands together with glee today, after the share price leapt 52% to US$8.57 in the week following its second-quarter results. Revenues of US$141m came in a modest 3.7% below forecasts. Statutory losses were a relative bright spot though, with a per-share loss of US$0.22 coming in a substantial 55% smaller than what the analysts had expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Following the recent earnings report, the consensus from three analysts covering Emergent BioSolutions is for revenues of US$816.3m in 2025. This implies a measurable 4.1% decline in revenue compared to the last 12 months. Statutory earnings per share are forecast to plunge 59% to US$1.08 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$822.0m and earnings per share (EPS) of US$0.83 in 2025. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the sizeable expansion in earnings per share expectations following these results.

Check out our latest analysis for Emergent BioSolutions

The consensus price target rose 69% to US$13.50, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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. Currently, the most bullish analyst values Emergent BioSolutions at US$15.00 per share, while the most bearish prices it at US$12.00. 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.

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. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2025 compared to the historical decline of 11% per annum over the past five years. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 19% annually. So while a broad number of companies are forecast to grow, unfortunately Emergent BioSolutions is expected to see its revenue affected worse than other companies in 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 Emergent BioSolutions' earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. 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. We have forecasts for Emergent BioSolutions going out to 2027, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with Emergent BioSolutions (at least 2 which shouldn't be ignored) , and understanding them should be part of your investment process.

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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.