Analysts Are Updating Their Mediclinic International plc (LON:MDC) Estimates After Its Half-Yearly Results
It's been a good week for Mediclinic International plc (LON:MDC) shareholders, because the company has just released its latest interim results, and the shares gained 4.7% to UK£3.16. Overall the results were a little better than the analysts were expecting, with revenues beating forecasts by 2.3%to hit UK£1.4b. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Mediclinic International
Following last week's earnings report, Mediclinic International's eight analysts are forecasting 2021 revenues to be UK£2.96b, approximately in line with the last 12 months. Mediclinic International is also expected to turn profitable, with statutory earnings of UK£0.12 per share. In the lead-up to this report, the analysts had been modelling revenues of UK£2.92b and earnings per share (EPS) of UK£0.096 in 2021. Although the revenue estimates have not really changed, we can see there's been a great increase in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
There's been no major changes to the consensus price target of UK£3.33, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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 Mediclinic International analyst has a price target of UK£4.30 per share, while the most pessimistic values it at UK£2.80. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 0.5%, a significant reduction from annual growth of 7.1% 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 6.1% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Mediclinic International is expected to lag the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Mediclinic International 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 Mediclinic International'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.
With that in mind, we wouldn't be too quick to come to a conclusion on Mediclinic International. Long-term earnings power is much more important than next year's profits. We have forecasts for Mediclinic International going out to 2025, and you can see them free on our platform here.
You can also view our analysis of Mediclinic International's balance sheet, and whether we think Mediclinic International is carrying too much debt, for free on our platform here.
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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
