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Ambu A/S Just Beat EPS By 19%: Here's What Analysts Think Will Happen Next

Ambu A/S (CPH:AMBU B) just released its first-quarter report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 4.4% to hit ø760m. Ambu reported statutory earnings per share (EPS) ø0.17, which was a notable 19% above what analysts had forecast. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.

See our latest analysis for Ambu

CPSE:AMBU B Past and Future Earnings, February 7th 2020
CPSE:AMBU B Past and Future Earnings, February 7th 2020

Following the latest results, Ambu's seven analysts are now forecasting revenues of ø3.47b in 2020. This would be a notable 19% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to reduce 2.2% to ø1.18 in the same period. Before this earnings report, analysts had been forecasting revenues of ø3.41b and earnings per share (EPS) of ø1.16 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

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With analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 7.0% to ø135. It looks as though analysts previously had some doubts over whether the business would live up to their expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Ambu analyst has a price target of ø185 per share, while the most pessimistic values it at ø88.00. 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.

It can also be useful to step back and take a broader view of how analyst forecasts compare to Ambu's performance in recent years. Analysts are definitely expecting Ambu's growth to accelerate, with the forecast 19% growth ranking favourably alongside historical growth of 11% 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 8.5% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Ambu is expected to grow much faster than its market.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Ambu's revenues are expected to grow faster than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Ambu analysts - going out to 2024, and you can see them free on our platform here.

It might also be worth considering whether Ambu's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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.

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. Thank you for reading.