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Investors in Avanos Medical, Inc. (NYSE:AVNS) had a good week, as its shares rose 6.6% to close at US$32.84 following the release of its annual results. It was a respectable set of results; while revenues of US$698m were in line with analyst predictions, statutory losses were 20% smaller than expected, with Avanos Medical losing US$0.96 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Avanos Medical after the latest results.
Taking into account the latest results, the most recent consensus for Avanos Medical from six analysts is for revenues of US$738.2m in 2020, which is an okay 5.8% increase on its sales over the past 12 months. Avanos Medical is also expected to turn profitable, with statutory earnings of US$0.74 per share. Before this earnings report, analysts had been forecasting revenues of US$736.8m and earnings per share (EPS) of US$0.74 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$36.43, suggesting that the company has met expectations in its recent result. 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. There are some variant perceptions on Avanos Medical, with the most bullish analyst valuing it at US$48.00 and the most bearish at US$23.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
In addition, we can look to Avanos Medical's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. One thing stands out from these estimates, which is that analysts are forecasting Avanos Medical to grow faster in the future than it has in the past, with revenues expected to grow 5.8%. If achieved, this would be a much better result than the 25% annual decline 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 revenue grow 7.7% per year. Although Avanos Medical's revenues are expected to improve, it seems that analysts are still bearish on the business, forecasting it to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Avanos Medical's revenues are expected to perform worse than the wider market. The consensus price target held steady at US$36.43, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Avanos Medical going out to 2022, and you can see them free on our platform here.
You can also view our analysis of Avanos Medical's balance sheet, and whether we think Avanos Medical is carrying too much debt, for free on our platform here.
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