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Results: Mediclinic International plc Exceeded Expectations And The Consensus Has Updated Its Estimates

Simply Wall St

As you might know, Mediclinic International plc (LON:MDC) just kicked off its latest half-yearly results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 4.0% to hit UK£1.5b. Mediclinic International also reported a profit of UK£0.15, which was an impressive 66% above what analysts had forecast. 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. So we gathered the latest post-earnings forecasts to see what analysts are forecasting for next year.

See our latest analysis for Mediclinic International

LSE:MDC Past and Future Earnings, November 18th 2019

Taking into account the latest results, the current consensus from Mediclinic International's ten analysts is for revenues of UK£3.18b in 2020, which would reflect an okay 3.9% increase on its sales over the past 12 months. Earnings per share are expected to soar 62% to UK£0.28. In the lead-up to this report, analysts had been modelling revenues of UK£3.11b and earnings per share (EPS) of UK£0.26 in 2020. It looks like there's been a modest increase in sentiment following the latest results, with analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

Despite these upgrades, analysts have not made any major changes to their price target of UK£3.92, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Mediclinic International analyst has a price target of UK£5.10 per share, while the most pessimistic values it at UK£3.10. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Mediclinic International shareholders.

It can also be useful to step back and take a broader view of how analyst forecasts compare to Mediclinic International's performance in recent years. It's pretty clear that analysts expect Mediclinic International's revenue growth will slow down substantially, with revenues next year expected to grow 3.9%, compared to a historical growth rate of 10% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 7.7% next year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Mediclinic International to grow slower than the wider market.

The Bottom Line

The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Mediclinic International's earnings potential next year. Fortunately, analysts also upgraded their revenue estimates, although our data indicates sales are expected to perform worse 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Mediclinic International going out to 2024, and you can see them free on our platform here.

It might also be worth considering whether Mediclinic International's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, 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 editorial-team@simplywallst.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. Thank you for reading.