Revenue Beat: Polar Capital Holdings plc Beat Analyst Estimates By 6.9%
A week ago, Polar Capital Holdings plc (LON:POLR) came out with a strong set of annual numbers that could potentially lead to a re-rate of the stock. The company beat expectations with revenues of UK£208m arriving 6.9% ahead of forecasts. Statutory earnings per share (EPS) were UK£0.64, 4.9% ahead of estimates. 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 Polar Capital Holdings after the latest results.
View our latest analysis for Polar Capital Holdings
Following the latest results, Polar Capital Holdings' three analysts are now forecasting revenues of UK£221.8m in 2022. This would be a reasonable 6.7% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to shrink 9.2% to UK£0.61 in the same period. In the lead-up to this report, the analysts had been modelling revenues of UK£215.3m and earnings per share (EPS) of UK£0.61 in 2022. There doesn't appear to have been a major change in sentiment following the results, other than the modest lift to revenue estimates.
The analysts increased their price target 8.1% to UK£9.94, perhaps signalling that higher revenues are a strong leading indicator for Polar Capital Holdings's valuation. 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 Polar Capital Holdings analyst has a price target of UK£10.50 per share, while the most pessimistic values it at UK£8.80. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
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. We would highlight that Polar Capital Holdings' revenue growth is expected to slow, with the forecast 6.7% annualised growth rate until the end of 2022 being well below the historical 18% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.5% annually. Even after the forecast slowdown in growth, it seems obvious that Polar Capital Holdings is also expected to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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 in mind, we wouldn't be too quick to come to a conclusion on Polar Capital Holdings. Long-term earnings power is much more important than next year's profits. We have forecasts for Polar Capital Holdings going out to 2024, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Polar Capital Holdings , and understanding these should be part of your investment process.
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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