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Earnings Miss: Elekta AB (publ) Missed EPS By 11% And Analysts Are Revising Their Forecasts

Simply Wall St

The quarterly results for Elekta AB (publ) (STO:EKTA B) were released last week, making it a good time to revisit its performance. Revenues were in line with forecasts, at kr3.7b, although earnings per share came in 11% below what analysts expected, at kr0.58 per share. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest forecasts to see what analysts are expecting for next year.

View our latest analysis for Elekta

OM:EKTA B Past and Future Earnings, December 1st 2019

Following the latest results, Elekta's 14 analysts are now forecasting revenues of kr15.2b in 2020. This would be a satisfactory 6.2% improvement in sales compared to the last 12 months. Earnings per share are expected to bounce 21% to kr3.52. Before this earnings report, analysts had been forecasting revenues of kr15.2b and earnings per share (EPS) of kr3.76 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share forecasts for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at kr131, 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. There are some variant perceptions on Elekta, with the most bullish analyst valuing it at kr180 and the most bearish at kr93.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Elekta's past performance and to peers in the same market. Analysts are definitely expecting Elekta's growth to accelerate, with the forecast 6.2% growth ranking favourably alongside historical growth of 4.9% per annum over the past five years. Compare this with other companies in the same market, which are forecast to see a revenue decline of 13% next year. So it's clear that despite the acceleration in growth, Elekta is expected to grow meaningfully slower than the market average.

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. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse 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.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Elekta going out to 2024, and you can see them free on our platform here..

It might also be worth considering whether Elekta's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.