Organon & Co. (NYSE:OGN) Just Reported Full-Year Earnings: Have Analysts Changed Their Mind On The Stock?

It's been a sad week for Organon & Co. (NYSE:OGN), who've watched their investment drop 10% to US$26.02 in the week since the company reported its full-year result. It looks like the results were a bit of a negative overall. While revenues of US$6.2b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 3.1% to hit US$3.59 per share. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Organon

Following last week's earnings report, Organon's nine analysts are forecasting 2023 revenues to be US$6.29b, approximately in line with the last 12 months. Statutory earnings per share are expected to shrink 5.5% to US$3.41 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$6.31b and earnings per share (EPS) of US$3.82 in 2023. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.

The consensus price target held steady at US$32.89, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Organon at US$43.00 per share, while the most bearish prices it at US$24.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Organon shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. From these estimates it looks as though the analysts expect the years of declining sales to come to an end, given the flat revenue forecast out to 2023. That would be a definite improvement, given that the past five years have seen sales shrink 13% annually. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.7% per year. So it's pretty clear that, although revenues are improving, Organon is still expected to grow slower than the industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Organon. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Organon's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 Organon going out to 2025, and you can see them free on our platform here.

You still need to take note of risks, for example - Organon has 5 warning signs (and 2 which shouldn't be ignored) we think 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.