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Spirax-Sarco Engineering plc (LON:SPX) Released Earnings Last Week And Analysts Lifted Their Price Target To UK£127

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Investors in Spirax-Sarco Engineering plc (LON:SPX) had a good week, as its shares rose 4.4% to close at UK£158 following the release of its interim results. Spirax-Sarco Engineering reported in line with analyst predictions, delivering revenues of UK£644m and statutory earnings per share of UK£2.35, 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've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Spirax-Sarco Engineering

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Following the latest results, Spirax-Sarco Engineering's 15 analysts are now forecasting revenues of UK£1.35b in 2021. This would be a credible 6.8% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to ascend 11% to UK£3.09. Before this earnings report, the analysts had been forecasting revenues of UK£1.36b and earnings per share (EPS) of UK£2.90 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target rose 8.3% to UK£127, suggesting that higher earnings estimates flow through to the stock's valuation as well. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Spirax-Sarco Engineering, with the most bullish analyst valuing it at UK£174 and the most bearish at UK£100.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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. The analysts are definitely expecting Spirax-Sarco Engineering's growth to accelerate, with the forecast 14% annualised growth to the end of 2021 ranking favourably alongside historical growth of 11% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.9% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Spirax-Sarco Engineering to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Spirax-Sarco Engineering following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes 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 Spirax-Sarco Engineering going out to 2023, 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 2 warning signs for Spirax-Sarco Engineering that you need to be mindful of.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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