Here's What Analysts Are Forecasting For Morgan Advanced Materials plc (LON:MGAM) After Its Full-Year Results
It's been a good week for Morgan Advanced Materials plc (LON:MGAM) shareholders, because the company has just released its latest yearly results, and the shares gained 4.3% to UK£3.07. It was a workmanlike result, with revenues of UK£1.1b coming in 2.1% ahead of expectations, and statutory earnings per share of UK£0.31, in line with analyst appraisals. 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.
See our latest analysis for Morgan Advanced Materials
Taking into account the latest results, Morgan Advanced Materials' eight analysts currently expect revenues in 2023 to be UK£1.10b, approximately in line with the last 12 months. Statutory earnings per share are expected to nosedive 24% to UK£0.23 in the same period. Before this earnings report, the analysts had been forecasting revenues of UK£1.08b and earnings per share (EPS) of UK£0.24 in 2023. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a small increase to to revenue forecasts.
Even though revenue forecasts increased, there was no change to the consensus price target of UK£3.77, suggesting the analysts are focused on earnings as the driver of value creation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Morgan Advanced Materials analyst has a price target of UK£4.30 per share, while the most pessimistic values it at UK£2.35. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. Over the past five years, revenues have declined around 0.5% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 0.9% decline in revenue until the end of 2023. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 5.4% per year. So while a broad number of companies are forecast to grow, unfortunately Morgan Advanced Materials is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target held steady at UK£3.77, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Morgan Advanced Materials. Long-term earnings power is much more important than next year's profits. We have forecasts for Morgan Advanced Materials going out to 2025, 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 Morgan Advanced Materials you should be aware of, and 1 of them doesn't sit too well with us.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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