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It's been a sad week for Jazz Pharmaceuticals plc (NASDAQ:JAZZ), who've watched their investment drop 14% to US$117 in the week since the company reported its annual result. The result was positive overall - although revenues of US$2.2b were in line with what analysts predicted, Jazz Pharmaceuticals surprised by delivering a statutory profit of US$9.09 per share, modestly greater than expected. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for Jazz Pharmaceuticals from 16 analysts is for revenues of US$2.36b in 2020, which is a decent 9.0% increase on its sales over the past 12 months. Statutory earnings per share are forecast to crater 27% to US$6.75 in the same period. In the lead-up to this report, analysts had been modelling revenues of US$2.36b and earnings per share (EPS) of US$10.61 in 2020. So there's definitely been a decline in analyst sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$166, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Jazz Pharmaceuticals, with the most bullish analyst valuing it at US$205 and the most bearish at US$124 per share. This shows there is still quite 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.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Jazz Pharmaceuticals's past performance and to peers in the same market. We would highlight that Jazz Pharmaceuticals's revenue growth is expected to slow, with forecast 9.0% increase next year well below the historical 12%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 5.1% next year. So it's pretty clear that, while Jazz Pharmaceuticals's revenue growth is expected to slow, it's still expected to grow faster than the market itself.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Jazz Pharmaceuticals. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster 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 Jazz Pharmaceuticals going out to 2024, and you can see them free on our platform here..
It might also be worth considering whether Jazz Pharmaceuticals'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 email@example.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.
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