SYNLAB AG Just Missed Earnings

Shareholders will be ecstatic, with their stake up 35% over the past week following SYNLAB AG‘s (FRA:SYAB) latest full-year results. Statutory earnings per share fell badly short of expectations, coming in at €0.68, some 26% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at €3.3b. 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. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on SYNLAB after the latest results.

See our latest analysis for SYNLAB

Taking into account the latest results, the eight analysts covering SYNLAB provided consensus estimates of €2.68b revenue in 2023, which would reflect a not inconsiderable 17% decline on its sales over the past 12 months. Statutory earnings per share are forecast to crater 56% to €0.30 in the same period. Before this earnings report, the analysts had been forecasting revenues of €2.73b and earnings per share (EPS) of €0.41 in 2023. So there’s definitely been a decline in sentiment after the latest results, noting the pretty serious reduction to new EPS forecasts.

The consensus price target held steady at €11.64, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. The most optimistic SYNLAB analyst has a price target of €19.00 per share, while the most pessimistic values it at €8.20. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 17% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 15% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – SYNLAB is expected to lag the wider industry.

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The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will 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. At Simply Wall St, we have a full range of analyst estimates for SYNLAB going out to 2025, and you can see them free on our platform here..

Even so, be aware that SYNLAB is showing 4 warning signs in our investment analysis , and 1 of those is significant…

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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