Last week saw the newest full-year earnings release from Agilent Technologies, Inc. (NYSE:A), an important milestone in the company's journey to build a stronger business. Revenues of US$5.2b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$3.37, missing estimates by 3.6%. 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 thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Agilent Technologies from 15 analysts is for revenues of US$5.54b in 2020, which is a modest 7.3% increase on its sales over the past 12 months. Statutory earnings per share are forecast to fall 18% to US$2.80 in the same period. Before this earnings report, analysts had been forecasting revenues of US$5.54b and earnings per share (EPS) of US$2.80 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$85.44. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Agilent Technologies analyst has a price target of US$93.00 per share, while the most pessimistic values it at US$66.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Agilent Technologies's past performance and to peers in the same market. It's clear from the latest estimates that Agilent Technologies's rate of growth is expected to accelerate meaningfully, with forecast 7.3% revenue growth noticeably faster than its historical growth of 5.7%p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 7.8% per year. Agilent Technologies is expected to grow at about the same rate as its market, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider market. The consensus price target held steady at US$85.44, with the latest estimates not enough to have an impact on analysts' estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Agilent Technologies going out to 2024, and you can see them free on our platform here.
You can also view our analysis of Agilent Technologies's balance sheet, and whether we think Agilent Technologies is carrying too much debt, for free on our platform here.
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