Last week, you might have seen that EKF Diagnostics Holdings plc (LON:EKF) released its half-year result to the market. The early response was not positive, with shares down 4.4% to UK£0.39 in the past week. Results were mixed, with revenues of UK£37m exceeding expectations, even as statutory earnings per share (EPS) fell badly short. Earnings were UK£0.0048 per share, -53% short of analyst expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for EKF Diagnostics Holdings
After the latest results, the consensus from EKF Diagnostics Holdings' three analysts is for revenues of UK£64.1m in 2022, which would reflect a painful 21% decline in sales compared to the last year of performance. Statutory earnings per share are expected to dive 40% to UK£0.012 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£63.0m and earnings per share (EPS) of UK£0.015 in 2022. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.
The consensus price target held steady at UK£0.72, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. Currently, the most bullish analyst values EKF Diagnostics Holdings at UK£0.96 per share, while the most bearish prices it at UK£0.60. 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 EKF Diagnostics Holdings shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with a forecast 37% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 17% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.1% per year. It's pretty clear that EKF Diagnostics Holdings' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that EKF Diagnostics Holdings' 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple EKF Diagnostics Holdings analysts - going out to 2024, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for EKF Diagnostics Holdings 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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