Medigene AG (ETR:MDG1) shares fell 4.2% to €5.69 in the week since its latest first-quarter results. Revenues fell badly short of expectations, with sales of €2.1m missing analyst predictions by 80%. Earnings correspondingly nosedived, with Medigene reporting a loss of €0.23 per share, where analysts were expecting a profit. 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. We thought readers would find it interesting to see analysts' latest post-earnings forecasts for next year.
After the latest results, the five analysts covering Medigene are now predicting revenues of €9.55m in 2019. If met, this would reflect a meaningful 12% improvement in sales compared to the last 12 months. Losses are expected to reduce, shrinking 12% from last year to €1.09. Before this latest report, the consensus had been expecting revenues of €9.81m and €1.10 per share in losses. Although analysts have lowered their sales forecasts, they've also made a their earnings per share estimates, which implies there's been something of an uptick in sentiment following the latest results.
Analysts have cut their price target 7.2% to €12.98 per share, signalling that the declining revenue and ongoing losses are contributing to the lower 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 Medigene analyst has a price target of €17.20 per share, while the most pessimistic values it at €7.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Further, we can compare these estimates to past performance, and see how Medigene forecasts compare to the wider market's forecast performance. One thing stands out from these estimates, which is that analysts are forecasting Medigene to grow faster in the future than it has in the past, with revenues expected to grow 12%. If achieved, this would be a much better result than the 6.5% annual decline over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 35% next year. So although Medigene's revenue growth is expected to improve, it is still expected to grow slower than the market.
The Bottom Line
The most important thing to note from these estimates is that the consensus increased its forecast losses next year, suggesting all may not be well at Medigene. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Medigene going out to 2021, and you can see them free on our platform here..
We also provide an overview of the Medigene Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.