September 26, 2022

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UDG Healthcare plc Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Investors in UDG Healthcare plc (LON:UDG) had a good week, as its shares rose 4.5{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} to close at UK£7.99 following the release of its full-year results. The result was positive overall – although revenues of US$1.3b were in line with what the analysts predicted, UDG Healthcare surprised by delivering a statutory profit of US$0.37 per share, modestly greater than expected. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for UDG Healthcare

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LSE:UDG Earnings and Revenue Growth December 19th 2020

Taking into account the latest results, UDG Healthcare’s nine analysts currently expect revenues in 2021 to be US$1.30b, approximately in line with the last 12 months. Per-share earnings are expected to climb 13{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} to US$0.42. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.29b and earnings per share (EPS) of US$0.41 in 2021. So it’s pretty clear that, although the analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.

There were no changes to revenue or earnings estimates or the price target of US$11.01, suggesting that the company has met expectations in its recent result. 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. There are some variant perceptions on UDG Healthcare, with the most bullish analyst valuing it at US$11.00 and the most bearish at US$5.65 per share. This shows there is still a bit of diversity in estimates, but analysts don’t appear to be totally split on the stock as though it might be a success or failure situation.

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 UDG Healthcare’s revenue growth will slow down substantially, with revenues next year expected to grow 1.8{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb}, compared to a historical growth rate of 5.4{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.8{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} next year. Factoring in the forecast slowdown in growth, it seems obvious that UDG Healthcare is also expected to grow slower than other industry participants.

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, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that UDG Healthcare’s revenues 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple UDG Healthcare analysts – going out to 2025, and you can see them free on our platform here.

You can also view our analysis of UDG Healthcare’s balance sheet, and whether we think UDG Healthcare is carrying too much debt, for free on our platform here.

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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. 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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