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Earnings Update: Surmodics, Inc. (NASDAQ:SRDX) Just Reported Its Third-Quarter Results And Analysts Are Updating Their Forecasts

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Investors in Surmodics, Inc. (NASDAQ:SRDX) had a good week, as its shares rose 2.9% to close at US$56.70 following the release of its quarterly results. Sales of US$24m came in 2.4% ahead of expectations, although statutory earnings didn't fare nearly so well, recording a loss of US$0.24, a 14% miss. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Surmodics

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earnings-and-revenue-growth

Taking into account the latest results, the consensus forecast from Surmodics' four analysts is for revenues of US$118.2m in 2022, which would reflect a solid 14% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to leap 561% to US$0.76. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$117.9m and earnings per share (EPS) of US$0.81 in 2022. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$74.25, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Surmodics analyst has a price target of US$83.00 per share, while the most pessimistic values it at US$68.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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. We can infer from the latest estimates that forecasts expect a continuation of Surmodics'historical trends, as the 11% annualised revenue growth to the end of 2022 is roughly in line with the 9.2% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 8.5% annually. So although Surmodics is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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 forecasts for Surmodics going out to 2023, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Surmodics you should be aware of.

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 (at) simplywallst.com.