Waters Corporation (NYSE:WAT) Released Earnings Last Week And Analysts Lifted Their Price Target To US$323

Waters Corporation (NYSE:WAT) came out with its annual results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. The result was positive overall - although revenues of US$3.0b were in line with what the analysts predicted, Waters surprised by delivering a statutory profit of US$10.84 per share, modestly greater than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Waters

Taking into account the latest results, Waters' 18 analysts currently expect revenues in 2024 to be US$2.99b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be US$11.05, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$3.02b and earnings per share (EPS) of US$11.33 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

Despite cutting their earnings forecasts,the analysts have lifted their price target 7.8% to US$323, suggesting that these impacts are not expected to weigh on the stock's value in the long term. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Waters, with the most bullish analyst valuing it at US$350 and the most bearish at US$275 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Waters is an easy business to forecast or the the analysts are all using similar 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 pretty clear that there is an expectation that Waters' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 1.1% growth on an annualised basis. This is compared to a historical growth rate of 6.1% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.1% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Waters.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Waters. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Waters' revenue is expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Waters going out to 2026, and you can see them free on our platform here.

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

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.