Medpace Holdings, Inc. Just Beat EPS By 58%: Here's What Analysts Think Will Happen Next
As you might know, Medpace Holdings, Inc. (NASDAQ:MEDP) just kicked off its latest second-quarter results with some very strong numbers. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 12% higher than the analysts had forecast, at US$205m, while EPS were US$0.64 beating analyst models by 58%. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Medpace Holdings after the latest results.
View our latest analysis for Medpace Holdings
Taking into account the latest results, the most recent consensus for Medpace Holdings from seven analysts is for revenues of US$904.2m in 2020 which, if met, would be a modest 2.5% increase on its sales over the past 12 months. Statutory earnings per share are predicted to bounce 22% to US$3.74. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$831.9m and earnings per share (EPS) of US$2.19 in 2020. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a great increase in earnings per share in particular.
It will come as no surprise to learn that the analysts have increased their price target for Medpace Holdings 27% to US$113on the back of these upgrades. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Medpace Holdings analyst has a price target of US$125 per share, while the most pessimistic values it at US$91.00. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Medpace Holdings' revenue growth will slow down substantially, with revenues next year expected to grow 2.5%, compared to a historical growth rate of 31% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.2% per year. Factoring in the forecast slowdown in growth, it seems obvious that Medpace Holdings is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Medpace Holdings' earnings potential next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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 Medpace Holdings going out to 2023, and you can see them free on our platform here..
It is also worth noting that we have found 1 warning sign for Medpace Holdings that you need to take into consideration.
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. 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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