Yahoo Finance Smith & Nephew plc Just Missed EPS By 38%: Here's What Analysts Think Will Happen Next
Shareholders might have noticed that Smith & Nephew plc (LON:SN.) filed its annual result this time last week. The early response was not positive, with shares down 8.5% to UK£10.41 in the past week. It looks like a pretty bad result, all things considered. Although revenues of US$5.5b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 38% to hit US$0.30 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Smith & Nephew after the latest results.
Check out our latest analysis for Smith & Nephew
Taking into account the latest results, the consensus forecast from Smith & Nephew's 16 analysts is for revenues of US$5.85b in 2024. This reflects a credible 5.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 118% to US$0.66. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$5.83b and earnings per share (EPS) of US$0.68 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at UK£13.21, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. The most optimistic Smith & Nephew analyst has a price target of UK£16.36 per share, while the most pessimistic values it at UK£10.78. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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 Smith & Nephew's growth to accelerate, with the forecast 5.4% annualised growth to the end of 2024 ranking favourably alongside historical growth of 2.4% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.8% annually. Smith & Nephew is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Smith & Nephew. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at UK£13.21, with the latest estimates not enough to have an impact on their price targets.
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 Smith & Nephew analysts - going out to 2026, 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 Smith & Nephew that you need to be mindful of.
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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.
