Yahoo Finance Earnings Miss: Swedish Orphan Biovitrum AB (publ) Missed EPS By 11% And Analysts Are Revising Their Forecasts
Swedish Orphan Biovitrum AB (publ) (STO:SOBI) came out with its first-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It was not a great result overall. While revenues of kr4.6b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 11% to hit kr3.98 per share. The 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for Swedish Orphan Biovitrum
Taking into account the latest results, the current consensus from Swedish Orphan Biovitrum's seven analysts is for revenues of kr16.1b in 2020, which would reflect a modest 3.2% increase on its sales over the past 12 months. Statutory earnings per share are forecast to shrink 8.8% to kr11.10 in the same period. Before this earnings report, the analysts had been forecasting revenues of kr15.8b and earnings per share (EPS) of kr11.31 in 2020. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a small lift in to revenue forecasts.
Even though revenue forecasts increased, there was no change to the consensus price target of kr230, suggesting the analysts are focused on earnings as the driver of value creation. 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. The most optimistic Swedish Orphan Biovitrum analyst has a price target of kr275 per share, while the most pessimistic values it at kr170. 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 Swedish Orphan Biovitrum shareholders.
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. It's pretty clear that there is an expectation that Swedish Orphan Biovitrum's revenue growth will slow down substantially, with revenues next year expected to grow 3.2%, compared to a historical growth rate of 33% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Swedish Orphan Biovitrum.
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. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Swedish Orphan Biovitrum analysts - going out to 2024, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 3 warning signs for Swedish Orphan Biovitrum that you need to be mindful of.
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