The Advanced Medical Solutions Group plc (LON:AMS) Half-Year Results Are Out And Analysts Have Published New Forecasts
Shareholders might have noticed that Advanced Medical Solutions Group plc (LON:AMS) filed its half-yearly result this time last week. The early response was not positive, with shares down 4.3% to UK£2.32 in the past week. Advanced Medical Solutions Group reported in line with analyst predictions, delivering revenues of UK£39m and statutory earnings per share of UK£0.087, suggesting the business is executing well and in line with its plan. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View our latest analysis for Advanced Medical Solutions Group
Taking into account the latest results, the current consensus, from the seven analysts covering Advanced Medical Solutions Group, is for revenues of UK£88.6m in 2020, which would reflect a small 4.6% reduction in Advanced Medical Solutions Group's sales over the past 12 months. Statutory earnings per share are expected to crater 39% to UK£0.039 in the same period. In the lead-up to this report, the analysts had been modelling revenues of UK£87.8m and earnings per share (EPS) of UK£0.05 in 2020. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at UK£2.80, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Advanced Medical Solutions Group, with the most bullish analyst valuing it at UK£3.35 and the most bearish at UK£2.28 per share. 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 Advanced Medical Solutions Group shareholders.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 4.6% revenue decline a notable change from historical growth of 8.5% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.8% annually for the foreseeable future. It's pretty clear that Advanced Medical Solutions Group's revenues are expected to perform substantially worse than 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 Advanced Medical Solutions Group. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Advanced Medical Solutions Group's revenues are expected to perform worse than the wider industry. The consensus price target held steady at UK£2.80, with the latest estimates not enough to have an impact on their price targets.
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 Advanced Medical Solutions Group going out to 2023, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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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