Last week, you might have seen that Medical Developments International Limited (ASX:MVP) released its half-year result to the market. The early response was not positive, with shares down 2.3% to AU$10.75 in the past week. It looks like a credible result overall - although revenues of AU$11m were what analysts expected, Medical Developments International surprised by delivering a (statutory) profit of AU$0.016 per share, an impressive 88% 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. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Following the latest results, Medical Developments International's three analysts are now forecasting revenues of AU$26.3m in 2020. This would be a decent 18% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to increase 8.8% to AU$0.019. Before this earnings report, analysts had been forecasting revenues of AU$24.5m and earnings per share (EPS) of AU$0.019 in 2020. So it's pretty clear consensus is mixed on Medical Developments International after the latest results; while analysts lifted revenue numbers, they also administered a small dip in per-share earnings expectations.
Analysts also upgraded Medical Developments International's price target 7.8% to AU$7.74, implying that the higher sales are expected to generate enough value to offset the forecast decline in earnings. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Medical Developments International analyst has a price target of AU$10.38 per share, while the most pessimistic values it at AU$5.68. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
In addition, we can look to Medical Developments International's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. Analysts are definitely expecting Medical Developments International's growth to accelerate, with the forecast 18% growth ranking favourably alongside historical growth of 13% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 29% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, analysts also expect Medical Developments International 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. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider market. Analysts also upgraded their price target, suggesting that analysts believe 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 Medical Developments International going out to 2022, and you can see them free on our platform here..
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