Investors in DiaSorin S.p.A. (BIT:DIA) had a good week, as its shares rose 5.1% to close at €110 following the release of its yearly results. It was an okay result overall, with revenues coming in at €706m, roughly what analysts had been expecting. 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 DiaSorin after the latest results.
Taking into account the latest results, the current consensus from DiaSorin's seven analysts is for revenues of €721.6m in 2020, which would reflect a credible 2.2% increase on its sales over the past 12 months. Statutory earnings per share are expected to increase 2.6% to €3.01. In the lead-up to this report, analysts had been modelling revenues of €753.6m and earnings per share (EPS) of €3.25 in 2020. Analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.
Despite the cuts to forecast earnings, there was no real change to the €103 price target, showing that analysts don't think the changes have a meaningful impact on the stock's intrinsic value. 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 DiaSorin analyst has a price target of €121 per share, while the most pessimistic values it at €89.60. 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.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. We would highlight that DiaSorin's revenue growth is expected to slow, with forecast 2.2% increase next year well below the historical 9.4%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 7.2% next year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect DiaSorin to grow slower than the wider market.
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. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. 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 said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for DiaSorin going out to 2024, and you can see them free on our platform here..
We also provide an overview of the DiaSorin Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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