Investors in AstraZeneca PLC (LON:AZN) had a good week, as its shares rose 9.1% to close at UK£84.73 following the release of its third-quarter results. Revenues were in line with forecasts, at US$6.6b, although statutory earnings per share came in 13% below what the analysts expected, at US$0.49 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on AstraZeneca after the latest results.
Taking into account the latest results, the consensus forecast from AstraZeneca's 22 analysts is for revenues of US$30.1b in 2021, which would reflect a meaningful 16% improvement in sales compared to the last 12 months. Per-share earnings are expected to surge 63% to US$3.10. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$30.2b and earnings per share (EPS) of US$3.11 in 2021. 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$120, suggesting that the company has met expectations in its recent result. 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. Currently, the most bullish analyst values AstraZeneca at US$118 per share, while the most bearish prices it at US$50.10. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting AstraZeneca's growth to accelerate, with the forecast 16% growth ranking favourably alongside historical growth of 0.6% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.5% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that AstraZeneca is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple AstraZeneca analysts - going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - AstraZeneca has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.
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.
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