Medpace Holdings, Inc. (NASDAQ:MEDP) defied analyst predictions to release its quarterly results, which were ahead of market expectations. Results were good overall, with revenues beating analyst predictions by 2.1% to hit US$231m. Statutory earnings per share (EPS) came in at US$0.76, some 9.2% above whatthe analysts had expected. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the seven analysts covering Medpace Holdings provided consensus estimates of US$815.9m revenue in 2020, which would reflect an uneasy 8.4% decline on its sales over the past 12 months. Statutory earnings per share are forecast to nosedive 27% to US$2.24 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$876.7m and earnings per share (EPS) of US$2.73 in 2020. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
Despite the cuts to forecast earnings, there was no real change to the US$83.40 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. Currently, the most bullish analyst values Medpace Holdings at US$93.00 per share, while the most bearish prices it at US$70.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast revenue decline of 8.4%, a significant reduction from annual growth of 33% over the last three years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Medpace Holdings is expected to lag the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Medpace Holdings. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse 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. At Simply Wall St, we have a full range of analyst estimates for Medpace Holdings going out to 2023, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Medpace Holdings that you should be aware of.
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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