Last week, you might have seen that Advanced Medical Solutions Group plc (LON:AMS) released its yearly result to the market. The early response was not positive, with shares down 6.3% to UK£2.40 in the past week. Revenues of UK£102m were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at UK£0.087, missing estimates by 5.2%. Following the result, 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. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Following the latest results, Advanced Medical Solutions Group's six analysts are now forecasting revenues of UK£115.0m in 2020. This would be a decent 12% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to accumulate 6.5% to UK£0.094. Before this earnings report, analysts had been forecasting revenues of UK£114.7m and earnings per share (EPS) of UK£0.10 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at UK£3.09, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 Advanced Medical Solutions Group at UK£3.80 per share, while the most bearish prices it at UK£2.60. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Advanced Medical Solutions Group's past performance and to peers in the same market. We can infer from the latest estimates that analysts are expecting a continuation of Advanced Medical Solutions Group's historical trends, as next year's forecast 12% revenue growth is roughly in line with 11% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 6.6% per year. So it's pretty clear that Advanced Medical Solutions Group is forecast to grow substantially faster than its market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Advanced Medical Solutions Group's revenues are expected to grow faster than the wider market. 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.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Advanced Medical Solutions Group going out to 2022, and you can see them free on our platform here.
We also provide an overview of the Advanced Medical Solutions Group Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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