The annual results for Waters Corporation (NYSE:WAT) were released last week, making it a good time to revisit its performance. Waters reported US$2.4b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$8.69 beat expectations, being 2.1% higher than what analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Following the latest results, Waters's 14 analysts are now forecasting revenues of US$2.46b in 2020. This would be an okay 2.0% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to rise 4.5% to US$9.15. In the lead-up to this report, analysts had been modelling revenues of US$2.49b and earnings per share (EPS) of US$9.49 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at US$208, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Waters at US$256 per share, while the most bearish prices it at US$182. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. We would highlight that Waters's revenue growth is expected to slow, with forecast 2.0% increase next year well below the historical 4.5%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 7.9% next year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Waters to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Waters's revenues are expected to perform worse than the wider market. The consensus price target held steady at US$208, with the latest estimates not enough to have an impact on analysts' estimated valuations.
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 Waters going out to 2023, and you can see them free on our platform here..
You can also see whether Waters is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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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