AFT Pharmaceuticals Limited (NZSE:AFT) defied analyst predictions to release its full-year results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 2.9% to hit NZ$106m. AFT Pharmaceuticals also reported a statutory profit of NZ$0.12, which was an impressive 23% above what the analysts had forecast. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on AFT Pharmaceuticals after the latest results.
Taking into account the latest results, the consensus forecast from AFT Pharmaceuticals' three analysts is for revenues of NZ$127.3m in 2021, which would reflect a substantial 21% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to step up 13% to NZ$0.14. Yet prior to the latest earnings, the analysts had been anticipated revenues of NZ$124.3m and earnings per share (EPS) of NZ$0.17 in 2021. So it's pretty clear the analysts have mixed opinions on AFT Pharmaceuticals after the latest results; even though they upped their revenue numbers, it came at the cost of a pretty serious reduction to per-share earnings expectations.
Curiously, the consensus price target rose 26% to NZ$4.34. We can only conclude that the forecast revenue growth is expected to offset the impact of the expected fall in earnings.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that AFT Pharmaceuticals' rate of growth is expected to accelerate meaningfully, with the forecast 21% revenue growth noticeably faster than its historical growth of 11%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 40% next year. It seems obvious that, while the future growth outlook is brighter than the recent past, AFT Pharmaceuticals is expected to grow slower 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 AFT Pharmaceuticals. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower 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.
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 forecasts for AFT Pharmaceuticals going out to 2023, and you can see them free on our platform here.
Before you take the next step you should know about the 4 warning signs for AFT Pharmaceuticals (1 makes us a bit uncomfortable!) that we have uncovered.
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